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Gain in financial markets gives Blackstone a lift

NEW YORK (AP) -- Stock markets near record levels are giving investment manager The Blackstone Group LP a lift.

The firm, headed by Stephen Schwarzman, has private equity, real estate and other divisions. On Thursday Blackstone reported a profit of $106.4 million, or 19 cents per share, in the last three months of 2012. That compares with a loss of $22.7 million, or 5 cents per share, the year before.

An adjusted profit measure favored by the private equity industry — economic net income — which strips out charges tied to employee stock grants from Blackstone's 2007 initial public offering of stock, rose 43 percent to $670 million, or 59 cents per share.

Shares rose 75 cents, or 4.3 percent, in morning trading to $18.19. The stock has risen 15 percent over the past 12 months.

Blackstone's private equity business raises money from large investors such as pension funds and uses that money and debt financing to buy companies — often distressed public companies. It aims to profit by selling them later to investors in an IPO, or to other companies.

The rising stock market makes the companies' private equity holdings more valuable and makes it easier to profitably sell companies to the public market. Revenue in Blackstone's private equity division rose 67 percent to $318.7 million.

A healthier real estate market also boosted Blackstone's quarter. Revenue in that division rose 3 percent to $403.9 million.

The firm makes money from fees it charges investors and from its share of profits made on investments.

Revenue from fees for managing investments and from its share of the gains rose 33 percent to total revenue of $1.23 billion in the fourth quarter.

The value of the assets managed by Blackstone rose 26 percent to $210 billion, which it said was a record. Big investors put more money into the firm's funds and investment gains improved.