The Blackstone Group L.P. (BX) recently completed the acquisition of Strategic Partners from Credit Suisse Group AG (CS). In Apr 2013, Blackstone had entered into a deal with Credit Suisse wherein it had agreed to buy Strategic Partners, the latter’s secondary private equity business with assets under management (AUM) worth $10 billion.
Blackstone has been on an expansion spree for quite some time and the recent acquisition comes in line with the company’s strategy to increase its product base worldwide. Notably Blackstone’s inorganic growth can be traced back to Nov 2012, when it closed the acquisition of Vivint Inc, a security provider, offering home automation and technology services.
Earlier, in the same month, Blackstone Capital Partners V, L.P − a private equity fund managed by Blackstone – announced the completion of the acquisition of GCA Services Group from Nautic Partners, L.L.C. and other minority shareholders. In Sep 2012, Blackstone had reached an agreement with real estate finance company Capital Trust, Inc. to acquire the latter’s investment unit.
The divestment of Strategic Partners will, on the other hand, help Credit Suisse focus on its core business and prudent cost management. Notably, in line with its ongoing business streamlining process, Credit Suisse sold its European exchange traded funds (ETF) business to BlackRock, Inc. (BLK) on Jul 1, 2013.
Our Viewpoint:
Blackstone’s recent acquisitions reflect the company’s solid capital position. Moreover, these strategic deals are expected to drive the company’s overall growth going forward. Additionally, the gradually improving economic conditions will aid the company’s fund raising ability, though regulatory changes may partly act as a deterrent. However, we remain concerned about the effects of capital market volatility on the company’s financial performance in the near term.
Currently, Blackstone carries a Zacks Rank #2 (Buy). Another bank Fortress Investment Group LLC (FIG) is also worth a look with the same Zacks rank.
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