Blackstone Group 2Q profit triples

Blackstone Group L.P. said Monday its profit tripled in the second quarter, as it assured investors it would have no problem finding financing for more of its blockbuster buyouts. The New York-based investment partnership's shares, which have been battered since a late-June initial public offering, recovered modestly on Monday.

Blackstone had been caught up in concerns that private equity buyout shops _ which buy and revamp companies using borrowed money _ could face leaner days following a frenetic buyout boom.

A global flight to safer investments, triggered by decaying credit quality, has siphoned away many of the dollars that lenders formerly used to finance private equity deals.

But executives struck an optimistic tone about the outlook for Blackstone, whose biggest shareholders include the French insurer AXA SA and the Chinese government.

Chief Operating Officer Tony James said in a conference call that lenders' newfound aversion to risk benefits Blackstone, by forcing many of the firm's smaller competitors out of the market.

"The room suddenly feels pretty empty," James said. "Banks are still making new loans, but they are being selective about it. They are leaning toward their biggest and best customers; that helps us."

In its first earnings report as a publicly traded company, the New York-based investment partnership said second-quarter net income surged to $774.4 million from $224.1 million in the second quarter of 2006.

Blackstone earns money mainly by charging clients fees for running its private equity, real estate and hedge funds. These fees tripled to $795.4 million during the second quarter, as the funds' money under management swelled by more than 50 percent to $91.77 billion.

Beside the benefits from fees, the firm also booked a $179.9 million investment gain, compared with a loss on investments in last year's second quarter. Total revenue climbed to $975.3 million from $324.6 million.

Blackstone Group, whose latest deals include multibillion-dollar takeovers of Equity Office Properties and Hilton Hotels Corp., was one of the firms leading a buyout craze the past few years.

James said the company found the first half of the year "extremely frustrating" because rival private equity firms routinely outbid Blackstone for takeovers by as much as 15 percent. The credit crunch has eased that pressure.

"In a market like this it is a real advantage for the bigger funds and the ones that have greater access to capital," he said. "Our opportunities to earn returns are substantially greater than they have been for some time."

Analysts did not expect the degree of optimism expressed by Blackstone, especially given the sharp deterioration in credit markets last week.

"I think we are all kind of pleasantly surprised to hear about your outlook on returns from here," Deutsche Bank analyst Matt Fischer told Blackstone's executives during the conference call.

Shares of Blackstone closed up 43 cents, or 1.7 percent, at $25.71, having given up much larger gains from earlier in the day. The stock is still down sharply from its IPO price of $31 and its first-day peak of $38.