Blackstone makes three-month loss

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Private equity firm Blackstone Group says it made a net loss of $170m (£84m) in the last three months of 2007.

The group was forced to write-down the value of its investment in the bond insurer FGIC.

Bond insurers guarantee a bond's value so that it can be treated as a safe investment. They have been hit by problems with mortgage-backed bonds.

The credit crisis has also been a problem for Blackstone, which relies on being able to borrow money.

Private equity companies operate by combining money invested by their clients with money borrowed from banks so they can increase the potential returns to investors.

Record low

The credit crunch has made banks more reluctant to lend large amounts of money, which has damaged the profitability of private equity companies and all but stopped the flow of private equity deals.

Blackstone's $170m net loss compares with net income of $1.18bn in the same quarter of 2007.

Blackstone launched on the New York Stock Exchange in June 2007 at a price of $31 per share.

Following the results announcement they hit $13.82.

The firm is 10% owned by the Chinese government, which paid $3bn for the stake in May 2007.