Blackstone: Credit Fuels Q3 Profits, Sees “Meaningful” Pickup in M&A, IPOs in 2025

While the credit business drove Blackstone's strong third-quarter earnings, becoming its largest business by assets, President and COO Jon Gray says the private markets giant is bullish on a pickup in M&A and IPOs in 2025, driving much-anticipated realizations in private equity.

Blackstone reported a 22% year-over-year increase in its credit and insurance assets under management (AUM), which now stand at $354.7B. This includes inflows of $21.4B during the quarter, accounting for more than half of all inflows in the period. In an October 17 interview with Bloomberg TV, Gray said Blackstone’s insurance-related AUM grew 24% to $221B, thanks to demand for higher returns in private credit, particularly from insurers.

“You look at what we're doing in private investment-grade credit primarily for insurers today and, on average, we've delivered 185 basis points of higher returns on A-rated credits,” Gray told Bloomberg. He said this attractive yield is a key reason for the continued momentum in the private credit space, particularly for investment-grade credit. “So it's an area that has a lot of momentum, and I think secularly, you'll see big investors around the world continue to allocate not only to non-investment-grade credit but to this investment-grade area also in the private space,” he said. Blackstone's overall credit AUM now totals $432B, split between corporate and real estate credit strategies.

Gray also touched on the current state of private equity, noting that while realizations have lagged, the firm is optimistic about a rebound in 2025. Specifically, he noted that with base rates – both short and to some extent long term – coming down, spreads in corporate and real estate tightening, banks becoming more aggressive on lending and so creating more liquidity in the market, and the equity markets hitting record highs, it is creating a “recipe” for realizations. 

The lone laggard, he acknowledged, is IPOs. “But when we look out we see a pipeline that's picking up momentum,” he said. “If you talk to the banks, their pipeline of large IPOs is double where it was six to 12 months ago, and we're having real-time discussions on IPOs.” Gray anticipates that M&A activity and IPO pipelines will accelerate as conditions improve, adding that debt costs for private equity deals have dropped by as much as 300 to 400 basis points compared to their peak.

“So I think we're starting to lay the foundation for a much better realization period,” he said. “It will happen. It takes time. You tend to plant seeds first and then harvest, but we're starting to move in that direction.” 

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Written By: Dakota