Blackstone: ‘We’re serious about tech’

Some takeaways, from both the earnings report and a subsequent media call with Blackstone (BX) president Tony James:

1. Slow investment quarter on the private equity side, with just $325 million committed/invested.

2. Private equity portfolio carrying values climbed 7.9% quarter-over-quarter, and 18.2% over 12 months.

3. Private equity compensation costs (non-performance fees) rose 15% from the year-earlier period.

4. Advisory revenue – which includes M&A advisory and fund placements – was down 12% from Q1 2012 to Q1 2013. Tony James said that Q1 is the firm’s most volatile quarter in advisory work, and expects increases in Q2 and Q3 advisory revenue based on existing pipelines. Worth noting that J.C. Penney (JCP) reportedly hired Blackstone last week to help it raise $1 billion.

5. When asked about club deals, James subtly joked about the Dahl case before saying: “LPs don’t love club deals, but returns of club deals have actually held their own.”

6. Doesn’t sound like BX is interested in participating on J.C. Penney, given what James said about Blackstone’s interest in having control of its PE deals. Pretty sure that comment also could extend to Michael Dell.

7. James declined to specifically address its pursuit of Dell Inc. (DELL), but did say that the firm is “serious about tech” and that it’s a “rich hunting ground for private equity.” He also said that he expects tech to grow at a higher rate than GDP, echoing recent comments by Silver Lake’s Glenn Hutchins

Blackstone has a pretty rough tech track record, and has parted ways with most investors who led deals like Freescale Semiconductor. But earlier this year it hired former IBM and Dell M&A boss David Johnson, and put one of its most senior PE investor (Chin Chu) on the tech team. It also transitioned one of its young up-and-comers, Martin Brand, to tech.

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