February 1, 2018 / 1:49 PM / 10 months ago

UPDATE 1-Blackstone fourth-quarter profit up 5 pct on private equity gains

* Assets under management rise to record $434.1 bln in Q4

* Economic net income per share 71 cents vs forecast 67 cents

* Q4 boosted by valuation increase in private equity holdings (Rewrites with asset growth, adds CEO quote)

By Joshua Franklin

Feb 1 (Reuters) - Blackstone Group LP, the world's largest manager of alternative assets, said on Thursday a key measure of its earnings rose by 5 percent, helped by large gains in its private equity unit and strong performance by its real estate, credit, and hedge fund businesses.

Blackstone followed its peer Apollo Global Management in reporting strong appreciation in its buyout funds and higher profits as both benefited from the stock market rally and a string of asset sales.

Economic net income, which reflects the mark-to-market valuation gains or losses on Blackstone's portfolio and is a key earnings metric for U.S. private equity firms, rose to $850 million from $811.6 million in the year-ago period.

Quarterly economic net income was 71 cents per share, ahead of analysts' average expectation of 67 cents per share, according to Thomson Reuters I/B/E/S.

"In 2017, we took in $108 billion of capital inflows, invested more than $50 billion, and returned more than $55 billion to our limited partner investors through realizations – all new records for the firm," Blackstone Chief Executive Stephen Schwarzman said in a statement.

New York-based Blackstone agreed this week to buy a majority stake in the Financial and Risk business of Thomson Reuters Corp , the parent of Reuters News.

Blackstone's assets under management rose to a record $434.1 billion in the fourth quarter, up from $387 billion in the previous quarter.

The value of Blackstone's private equity funds, which account for around a quarter of its assets, rose 6.8 percent in the three months to end of December.

Fourth-quarter distributable earnings - the actual cash available for paying dividends - was up 94 percent on a year at $1.2 billion, as Blackstone took advantage of strong corporate valuations to exit some of its investments. (Reporting by Joshua Franklin in New York; Editing by Bill Rigby)

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