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Blackstone pay in 2022 might have been its lowest in years

Private equity titan Blackstone reported its final results for 2022, and the results are… Underwhelming.

The fund missed its ambitious target of $1tn assets under management (AUM) by the end of 2022, for one – although given that the original target for that was 2026, it seems unfair to call it a failure.

It might even have met its goal had it not been for the panic around its real estate trust, BREIT. It was four times more withdrawn from than the similarly sized (by AUM) private equity fund, and it’s worth mentioning that without the $52bn in outflows, Blackstone would have hit its $1tn threshold quite easily.

Whether the fund reaches $1tn sooner rather than later might be out of its hands now. Although a Deutsche Bank research note called the results "relatively resilient amid a tough macro backdrop", the market still had "fears of a major slowdown in fundamentals," aka, a recession. 

But it was pay at the fund that most caught the eye, with a massive fall in carried interest meaning that the fund paid out barely 40% of the amount of (total) compensation that it paid out last year.

Realised carried interest – which is essentially the good kind, the brown fat cells of private equity, as it signifies a successful exit from a successful investment – managed to stay more or less flat on the year. So did compensation paid in the form of salaries-and-bonuses, which was up 19%.

Although Blackstone didn’t give headcount figures in its quarterly filing, a conservative estimate averaging out employee growth over the last five years suggested that total compensation, which includes carried interest, was $826k. Although barely a whisker above the $818k paid in 2020, this pales in comparison most to the $2.2m Blacktsone paid per head in 2021.

What’s worse, conservative estimates are likely underestimating headcount growth – assuming the fund grew in 2022 as much as it did in 2021, by 20%, (and social media analysis suggests this is likely the case), our analysis suggests the fund paid out $776k in total compensation in 2022, a mere third of what it paid in 2021.

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AUTHORZeno Toulon

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