Blackstone Inc.

Good day and welcome to the Blackstone fourth quarter and full year 2024 investor call. Today's call 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.

Great. Thanks, Katie. And good morning, and welcome to Blackstone's fourth quarter conference call. Joining today are Steve Schwarzman, Chairman and CEO, John Gray, President and Chief Operating Officer, and Michael Che, Vice Chairman and Chief Financial Officer. Earlier this morning, we issued a press release and slide presentation, which are available on our website. We expect to file our 10-K report later next month. I'd like to remind you that today's call may include forward-looking statements which are uncertain and may differ from actual results materially. We do not undertake any duty to update these statements. For a discussion of some of the factors that can 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 an interest in any Blackstone fund. This audio cast is copyrighted material of Blackstone and may not be duplicated without consent. Quickly on results, we reported GAAP net income for the quarter of $1.3 billion. Distributable earnings were $2.2 billion, or $1.69 per common share, and we declared a dividend of $1.44 per share, which will be paid to holders of records as of February 10th. With that, I'll turn the call over to Steve.

Thank you, Weston, and good morning, and thank you for joining our call. Blackstone just reported one of the best quarters in our history. Distributable earnings increased 56% year-over-year to $2.2 billion, as Weston mentioned, underpinned by record FRE. Our limited partners entrusted us with $57 billion of inflows just in the fourth quarter and $171 billion for the year, reflecting strong momentum institutional, insurance, and private wealth channels. On particular note, we raised $28 billion in private wealth in 2024, including $23 billion in the perpetual strategies, nearly double. Repeat that, nearly double what we raised from individuals in these strategies in the prior year. All signs point to further acceleration in 2025. After corner end in January, we raised an additional $3.7 billion for our private wealth perpetuals, including the launch of our new infrastructure vehicles, representing a powerful affirmation of our unique position in this channel. We believe our $260 billion private wealth is multiples the size of our next largest competitor. Largest single contributor to the firm's financial results in the fourth quarter was our dedicated infrastructure strategy, BIP, which generated $1.2 billion of fee revenues. BIP has delivered remarkable investment performance since inception only six years ago. including 17% net returns annually for the commingled strategy. This performance has fueled exceptional growth, with AUM today of $55 billion, up 34% just in the past year alone. VIP anchors a broader infrastructure platform. That's a firm that exceeds $120 billion across equity, credit, and sections. In a relatively short period of time, we've established one of the world's largest infrastructure businesses. Our success in this area is a powerful illustration of how we've built an enduring leading business at Blackstone. It reflects the same blueprint for how we've been able to grow from $400,000 in startup capital in 1985 more than $1.1 trillion of AUM today, the largest alternative asset manager in the world, and why I believe we will continue to achieve strong growth in the future. It starts with innovation as a core competency of the firm, as we're always working to identify the next paradigm shift in the market. We evaluate whether we can create something truly differentiated for our limited partners. But the opportunity can be scaled significantly if we have the right team to lead it, drawing upon the firm's deep well of talent. Importantly, any new area can also add to the firm's intellectual capital and create synergies with our other businesses to make the rest of the firm better. We have carefully considered infrastructure as a standalone business for a number of years. We've been investing successfully in energy infrastructure projects for over a decade. Both our private equity and credit funds, which along with our extraordinary real estate franchise, made infrastructure a natural extension as a new business line. In 2017, we saw a historic investment opportunity emerging in the U.S. and around the world, made the decision to launch a dedicated strategy. We identified a talented individual in our private equity energy area, our partner Sean Klimczak, to lead the new business. We began raising capital in 2018, supported by an anchor commitment from an important limited partner. Today, With $55 billion in outstanding investment performance, VIP has exceeded our initial and predictably very high expectations. The team has done an exceptional job portfolio construction, focused on compelling thematic areas, including digital infrastructure, energy and power, and critical transportation infrastructure. and we see enormous runway ahead. Massive funding needs for projects globally mean there are more opportunities and available capital. We envision a growth path for our infrastructure business that parallels that of our real estate business, including geographic expansion, new client channels, moving across the capital structure, and risk-return spectrum. we started raising a European infrastructure perpetual vehicle last fall. And earlier this month, as I mentioned, launched a vehicle designed to give individual investors access to the full breadth of our infrastructure platform. Over time, we also see opportunities in Asia and the potential for sector-specific strategies. The growth of our infrastructure business was greatly helped by the other businesses at Blackstone and the firm's resources around the globe. These advantages include sourcing opportunities from and investing alongside our other funds. For example, VIP joined our real estate team in 2021 to privatize the QTS data center business, which has become the largest and fastest growing data center platform in the world. And now our leadership position in data centers is creating additional synergies across the firm, enabling us to address many new opportunities. And as VIP has continued to scale, it has in turn enhanced the firm's intellectual capital, relationships, and deal flow, supporting our growth in other areas, including our $90 billion infrastructure and asset-based credit platform, our infrastructure secondaries business, and our dedicated energy and energy transition focus funds. What I'm outlining this morning is just one compelling proof point of the power of the Blackstone platform. Designed the firm from the beginning to work this way, with each business making the other stronger, this network effect sets Blackstone apart in the asset management area. underpins the strength of our brand. Max is an accelerant for the firm's overall growth. Our clients have a positive experience in one area. They're much more likely to invest in additional Blackstone products and support our expansion. Building things organic from the ground up is challenging. It takes time. It involves upfront costs. However, we think our approach ultimately creates a stronger, more integrated firm, as well as significant economic benefits as compared to a strategy of cultural acquisitions. And it preserves and perpetuates our unique culture, which is foundational to the firm's success. As we head into the new year, we're moving into an environment where we see consequential tailwinds for our overall business. Market participants have been focused recently on volatility in the U.S. Treasury yields, reflecting persistent inflation concerns in the context of resilient U.S. economic growth, as well as policy uncertainty. With respect to inflation, what we see based on our expansive portfolio and our proprietary data that the U.S. is continuing on a path of disinflation, albeit at a more moderate pace than before. In policy, where there are different factors to consider, I believe the direction of travel fundamentally is toward policies that are pro-growth and pro-deregulation, which ultimately should be quite positive for our business. Closing, the power of Blackstone's platform will continue to drive us forward. Our positioning has never been stronger, nor our prospects brighter. I couldn't be prouder of our people and their dedication to serving our investors.