Blackstone Inc.

Good day and welcome to the Blackstone second quarter 2023 investor call. Today's conference is being recorded. At this time, all participants are in a listen-only mode. If you require operator assistance at any time, please press star zero. If you'd like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. At this time, I'd like to turn the conference over to Weston Tucker, head of shareholder relations. Please go ahead.

Thank you, Katie, and good morning, and welcome to Blackstone's second quarter conference call. Joining today are Steve Schwarzman, Chairman and CEO, John Gray, President and Chief Operating Officer, and Michael Che, Chief Financial Officer. Earlier this morning, we issued a press release and slide presentation, which are available on our website, and we expect to file our 10Q report in a few weeks. I'd like to remind you that today's call may include forward-looking statements, which are uncertain and outside of the firm's control and may differ from actual results materially. We do not undertake any duty to update these statements. For a discussion of some of the risks that could affect results, please see the risk factor section of our 10-K. We'll also refer to non-GAAP measures and you'll find reconciliations in the press release on the shareholders page of our website. Also note that nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase in interest in any Blackstone fund. This audio cast is copyrighted material of Blackstone and may not be duplicated without our consent. So on results, we reported GAAP net income for the quarter of $1.2 billion. Distributable earnings were also $1.2 billion, or 93 cents per common share. And we declared a dividend of 79 cents per share, which will be paid to holders of record as of July 31st. With that, I'll now turn the call over to Steve.

Thank you, Weston, and good morning. Thank you all for joining the call. Blackstone reached a remarkable milestone in the second quarter. we surpassed $1 trillion of assets under management. The first alternative manager to do so, more than three years ahead of the aspirational roadmap we presented at our investor day in 2018. This achievement is significant in many ways, including for me personally. I founded Blackstone with my partner Pete Peterson in 1985. with $400,000 of startup capital. We sent out 450 personal announcements of our new venture and published a full-page newspaper ad with the expectation that the phone would start ringing off the hook. It was a humbling experience when no one called other than a few people wishing us luck. When we started raising our first private equity fund, In 1986, with a $1 billion target, we discovered that getting a $5 or $10 million commitment was a substantial accomplishment. Fortunately, we hung in there and we were ultimately successful. Looking at Plaxton today, I feel an immense sense of pride. We've established an unparalleled global platform of leading business lines offering over 70 distinct investment strategies. We believe our clients view us as the gold standard in alternative asset management. And this milestone reflects the extraordinary level of trust we've built with them over nearly four decades. We've delivered for them in good times and bad, generating $300 billion of aggregate gains with minimal losses. In fact, virtually all of our drawdown funds we've launched in our history have been profitable for our investors. Our performances help secure retirees' pensions, fund students' educations, pay healthcare benefits, and protect and grow the savings of individual investors. we are tremendously proud of the role we've played in driving these outcomes. Our ability to create excess returns over long periods of time in support of these critically important objectives is what distinguishes us as a firm and powers our growth. This milestone is also reflective of Blackstone's distinctive positioning as the leading innovator in our industry. At our founding, we determined that building a great company required us to be in a continuous innovation mode, which we have institutionalized as a core competency of the firm. Our original strategic plan was to start in corporate advisory and then quickly move into private equity, followed by a succession of other asset management businesses over time. We only entered a new area when we saw the opportunity to generate great risk-adjusted returns for our customers. We identified a remarkable leader, and the new area created intellectual capital that benefited the rest of the firm. For example, we entered the hedge fund to funds business in 1990. Real estate in 1991, when values had collapsed, following the savings and loan crisis, and credit in 1998, which we expanded substantially in 2008 ahead of the generational investment opportunities that arose from the global financial crisis. In 2011, we launched a dedicated private wealth business. The following year, we created tactical opportunities. The year after that, we entered the nascent secondaries market for drawdown funds. In 2017, we launched our infrastructure strategy. In 2018, we started both our insurance solutions management and life sciences businesses. And in 2020, we launched our first growth equity fund. Today, nearly all of these major lines of business are market leaders their respective asset classes with exceptional long-term performance. There are many advantages that come from our unique scale. With our portfolio of over 230 companies, 12,000 real estate assets, and one of the largest lending businesses in the world, we believe that we have more information than just about anyone competing with us. We specialize in and the production and analysis of enormous amounts of data, which we review every week in our Monday morning meetings with each of our major product lines. This process, done over 35 years, helps us identify trends before others and adjust where we invest our clients' capital. This also allows us to maintain a hands-on management style, keeps our professionals fully connected, and supports centralized decision-making. Our focus on data aggregation and analysis also led us to establish our own data science group as early as 2015. We started building a team of exceptional data scientists, which today numbers over 50 people, and we are rapidly and significantly expanding our capabilities in artificial intelligence. We've been using AI to help improve operations in our portfolio companies, as well as at Blackstone itself. We believe that the new generation of AI has the potential to transform companies and industries, and the timeliness and effectiveness of its implementation will be determinative of who the winners and losers will be. Blackstone, fortunately, is in an enviable position in the alternative asset world with an eight-year head start in this field. And we are committed to further expanding our leadership position there as quickly as possible. Our growth, along with our commitment to meritocracy, have also allowed us to attract and retain great talent Many of the best people in the world want to work here at Blackstone. This year, we had 62,000 unique applicants for 169 first-year analyst positions, equating to a selection rate of less than three-tenths of 1%. Getting an entry-level job at Blackstone is 12 times harder than getting into Harvard. I doubt I'd be able to be hired today. Not sure that's a great thing. Our scale has also made the firm even safer. We were an A plus rated manager of third party capital, distributed across hundreds of segregated investment vehicles. We don't depend on deposits for our funding. and the vast majority of our capital is under long-term contracts or perpetual, which we carefully aligned with the duration of our investments. We don't operate with a cross-collateralized balance sheet like depository institutions. We have virtually no net leverage at the parent company compared to U.S. banks with an average of 12 times leverage. and we have no insurance liabilities. We've always believed in extreme conservatism in managing our capital structure and the structure of our funds. As the largest manager today, Blackstone has led the adoption of alternatives, which have revolutionized the field of investment management. When we started in 1985, alternatives were basically limited to private equity, and there were only a few public pension funds and insurance companies who invested in the asset class. Endowments, sovereign wealth funds, and retail investors, for example, had virtually no participation. Over the subsequent four decades, alternatives have grown to $12 trillion of assets. But this is still small. compared to the $225 trillion of liquid stocks and bonds. With a minimal share in total investable assets today, we expect alternatives to expand substantially in the future. I believe that Blackstone, given our unique brand and global reach, is the best positioned firm in the world to capture future opportunities for growth, in the alternatives area. The most compelling of these today include private credit and insurance, infrastructure globally, energy transition, life sciences, the develop of the alternatives business in Asia, and the private wealth channel for the democratization of alternatives in its early stages. John will discuss these areas in more detail. Our mission since 1985 is to be the best in the world at what we choose to do. Even as we've grown, we've never strayed from this mission or from the core values that have defined us, including excellence, integrity, meritocracy, teamwork, and dedication to serving our customers. To work at our firm, you must believe in our mission and embody these values. Blackstone is an extraordinary place and our prospects are accelerating. We never rest on our achievements and we're always looking ahead, striving to lift the firm to new heights. I strongly believe the best is ahead for Blackstone investors in our funds, and our shareholders. And with that, I'll turn the ball over to John.