Friday, March 23, 2007

One Billion in Fees and Counting

A few stray thoughts on the IPO released today:

After years of critiquing the operations of public companies—and taking over such notable ones as Equity Office Properties and Pinnacle Foods, Blackstone Group has filed with the SEC for an Initial Public Offering. At more than 200 pages, the document reveals many of the Private Equity firm’s business details for the first time: earnings of $2.27 billion last year, more than $2 billion in Group earnings from investors’ capital, and fees topping $1 billion. However, the filing is also notable for what it does not reveal: compensation packages for co-founders Stephen Schwarzman and Peter Peterson, how many shares Blackstone intends to sell or for how much, and how many shares existing managing directors and other employees will own after the offering.

The IPO promises to have far reaching effects in the financial world. Top Wall Street banks are underwriting the IPO—including Morgan Stanley, Citigroup, Merrill Lynch, Credit Suisse, Lehman Brothers and Deutsche Bank—and Blackstone has raised more than $30 billion in funds from institutional investors over the years. But it also states that the partnership structure will reduce or eliminate some responsibilities to common shareholders—including fiduciary responsibilities. It will take further analysis of the regulatory filing to determine to what extent this IPO will benefit those who purchase the stock, who will receive only limited voting rights or the estimated 375,000 people employed in Blackstone-controlled companie and our country.

No comments: