Friday, March 23, 2007

Schwarzman to Wall Street: "Do ya think I'm Sexy?"

News that the Blackstone IPO ricocheted around the financial world today as the king of Wall street announced that private equity giant Blackstone was going public...

The IPO has raised serious questions about the company's business model, its lack of transparency, and its over all impact on investors and the economy. Read what the Economist had to say about Blackstone and the deal:

"Few doubt that the clearest winners would be Blackstone's owners and the tight group of senior managers around them. A listing would allow them to extract and diversify some of the value tied up in the company. Mr Schwarzman could free up part of his stake, thought to be 40%, without losing control. He may, however, lose the respect of some of Blackstone's "limited partners", the institutions and wealthy individuals who invest in buy-out funds, if the move is construed as a brazen attempt to cash out at the top of the market. He and other private-equity bosses have acknowledged that the good times cannot last forever."

"Indeed, the limited partners would have few reasons to celebrate an IPO. They would suffer if Blackstone came under pressure from the market to support returns by raising its already plump fees. Some of them might decide to stop investing in its funds and buy its stock instead, retaining exposure without having to hand over a 1-1.5% management fee and 20% of investment gains.Blackstone itself might discover drawbacks too. It would have to disclose more information—lawyers argue over how much—and it would be shackled by what Mr Schwarzman has called the "tyranny of quarterly earnings". On the other hand, greater transparency might reduce the pressure from critics of private equity, who caricature the industry as a destructive force, stripping assets in the shadows. "

For the full story go to

1 comment:

Serena said...

Thanks for writing this.