Blackstone targets $20B in new UK insurance partnership as AUM climbs to $1.2T

Earnings Call Insights: Blackstone Inc. (BX) Q2 2025

Management View

• Stephen Allen Schwarzman, Chairman and CEO, opened by stating Blackstone reported outstanding results for the second quarter, with distributable earnings increasing 25% year-over-year to $1.6 billion. He highlighted "fee-related earnings grew a remarkable 31% year-over-year and represented one of the best quarters in our history." Schwarzman attributed this to the expansion of key growth initiatives in private wealth, credit and insurance, and infrastructure, as well as the launch of new drawdown funds.
• Schwarzman reported that fundraising inflows reached $52 billion in the second quarter and $212 billion for the last 12 months, resulting in assets under management rising 13% year-over-year to a record $1.2 trillion. He noted, "the firm achieved these results in a turbulent quarter for markets," referencing market volatility and policy uncertainty.
• Jonathan D. Gray, President and COO, emphasized "robust growth in private credit," Blackstone's "market-leading position in private wealth," and "strong momentum in the institutional channel." Gray detailed the recent partnership with Legal & General, targeting up to $20 billion over the next five years, and highlighted the expansion in infrastructure, with AUM up 32% year-over-year to $64 billion.
• Gray also discussed the progress in the private wealth channel, with AUM at almost $280 billion and second-quarter sales in the wealth channel increasing 30% year-over-year to $10 billion. He added, "BCRED led the way, raising $3.7 billion... BXPE raised $1.7 billion... BREIT had its best quarter of regular way fundraising in 2.5 years."
• Michael S. Chae, Vice Chairman and CFO, stated, "base management fees increased 14% to a record $1.9 billion in Q2, representing the third consecutive quarter of double-digit growth." He added, "fee-related earnings rose 31% year-over-year to $1.5 billion in the second quarter, or $1.19 per share. Distributable earnings increased 25% year-over-year to $1.6 billion in the second quarter, or $1.21 per share."

Outlook

• Management expects base management fees to continue a strong positive trajectory, stating the "rate of year-over-year growth in the second half resembling that of the first half." Chae highlighted "robust structural momentum in FRE, driven by the firm's multiple engines of growth."
• On transaction fees, Chae anticipated "a lower baseline in the second half with potential upside from rising transaction and market activity."
• Chae said, "we expect to close the sale of the firm's 6% stake in Resolution Life in connection with the sale of the company to Nippon Life."
• Gray noted, "we have the largest forward IPO pipeline since 2021," and expects "an acceleration of net realizations exiting this year and moving into 2026."

Financial Results

• Blackstone reported GAAP net income for the quarter of $1.6 billion. Distributable earnings were $1.6 billion, or $1.21 per common share, and a dividend of $1.03 per share was declared.
• Total AUM increased 13% year-over-year to $1.2 trillion, while fee-earning AUM rose 10% year-over-year to $887 billion. Total fee revenues were $2.5 billion in the second quarter, up 27% year-over-year and up 14% sequentially from Q1.
• Fee-related performance revenues reached $472 million in Q2, up over 2.5 folds from last year's second quarter.
• Investment performance included corporate private equity funds appreciating 5.1% in the quarter and 17% for the last 12 months. Tactical Opportunities Funds appreciated 4.1% in the quarter, and SP secondaries funds appreciated 6.6%. Infrastructure appreciated 2.9% in the quarter and 19% for the last 12 months. Non-investment-grade private credit strategies reported a gross return of 3.0% in the second quarter and over 13% for the last 12 months.

Q&A

• Alexander Blostein, Goldman Sachs: Asked about demand for private credit amid spread compression. Jonathan D. Gray responded the "demand remains extraordinarily robust" and clients are "enthused about... the enduring premium between the liquid markets and private credit."
• Glenn Schorr, Evercore ISI: Inquired about drivers for real estate recovery. Gray explained, "the building blocks for this recovery are clearly coming into place," citing new supply coming down and cost of capital improving, and added, "our confidence on the ultimate outcome high."
• Craig Siegenthaler, BofA Securities: Asked about the secondaries fund's return and fundraising outlook. Michael S. Chae attributed robust returns to a "very significant large new purchase," while Gray noted "deal volume... up something like 40%... in the first half of the year over last year."
• Michael Cyprys, Morgan Stanley: Questioned about alts in the 401(k) retirement channel. Gray responded, "I do think it's logical that it happens more in the target date funds," and emphasized the firm's competitive positioning in large-scale perpetual products.
• William Katz, TD Cowen: Asked about FRE margin and realization payouts. Chae said, "overall for the fiscal year, we're tracking favorably against the initial view we gave in January of sort of stability as a guidepost."
• Daniel Fannon, Jefferies: Sought more color on confidence that the "dealmaking pause is behind us." Gray replied, "lots of things are coming together... overall a more constructive environment," and pointed to a "busiest pipeline we've had since 2021 of potential IPOs."

Sentiment Analysis

• Analysts' tone reflected cautious optimism, with probing on private credit demand, real estate recovery, and dealmaking activity, but their questioning was generally neutral and constructive.
• Management maintained a confident and slightly upbeat tone in prepared remarks and the Q&A, frequently emphasizing robust growth, record results, and optimism about future opportunities. Phrases like "we are highly optimistic about the road ahead" and "our confidence on the ultimate outcome high" were used.
• Compared to the previous quarter, management displayed increased confidence, especially regarding transaction activity and market recovery, while analysts remained consistently neutral but focused on key growth and risk areas.

Quarter-over-Quarter Comparison

• Guidance language shifted toward more optimism, with management now expecting an acceleration in realizations and IPO activity, compared to previous caution regarding market uncertainty and tariffs.
• Strategic focus moved further toward scaling private credit, expanding insurance partnerships, and strengthening the private wealth channel. New partnerships, such as with Legal & General, were highlighted this quarter.
• Analysts maintained focus on private credit, real estate recovery, and fundraising, but questions this quarter reflected increased interest in the timing and drivers of market normalization and product ramp-up.
• Key metric changes included higher AUM growth (13% year-over-year vs. 10% previously), increased fee revenues, and greater fee-related earnings growth (31% vs. 9% previously).
• Management’s tone was more confident than in Q1, especially regarding market recovery and fundraising momentum, while analyst tone was steady.

Risks and Concerns

• Management recognized ongoing market uncertainties, including "tariffs, policy uncertainty and geopolitical instability."
• Chae noted that "transaction fees" could see a lower baseline in the second half, but with upside potential.
• Real estate recovery was discussed as gradual and dependent on continued supply reductions and lower rates.
• Analysts flagged concerns about credit spread compression, real estate performance, and the pace of recovery in transaction activity.

Final Takeaway

Blackstone's second quarter 2025 results showcased robust earnings and record AUM, underpinned by substantial momentum in private credit, wealth, and institutional channels. Management highlighted expanding partnerships, notably with Legal & General, and signaled a constructive outlook for realization activity and IPOs heading into 2026. The firm remains focused on leveraging its scale and diversified platform, while acknowledging ongoing external uncertainties and emphasizing readiness to capitalize on emerging opportunities across alternative asset classes.

Read the full Earnings Call Transcript