Blackstone
1. Why go public for Blackstone
Blackstone’s IPO reflect some of public private equity company’s advantage and also the special need for itself.
2. What are the built-in tensions with a public private equity? How does Blackstone’s attempt to reconcile them?
Brief Introduction
The Blackstone Group is an American multinational private equity, investment banking, alternative asset management and financial services corporation based in New York City.
Blackstone specializes in private equity, creditand hedge fund investment strategies, as well as financial advisory services Blackstone's private equity business has been one of the largest investors in leveraged buyout transactions over the last decade, while its real estate business has actively acquired commercial real estate.
The product of months of intense and secret analysis within the firm, the move- the sale of
10% of the general partner- was carefully planned to balance the interests of all parties involved. The structure made use of a specialized vehicle called a Master Limited Partnership form. On March 22, 2007, Blackstone rocked the investing world by announcing plans to go to public.
WHY go public? WHAT are the built-in tensions with a public private equity firm?
HOW does Blackstone’s structure attempt to reconcile them? IS Blackstone’s model the future for large scale PE? IF you were a limited partner (LP) in Blackstone, HOW would you view the structure Blackstone has put in place to go public? UNIT HOLDER?
OR LP?
First, public fund could be inexpensive source of capital for the firm: At the market average of 20x earnings, Blackstone’s implied cost of capital was 5%. Historically its investments had returned 30% to 35%, offering a good spread, especially as the firm, raising bigger funds, was increasing its own commitments to its deals.
Second, going public is a way of deepening the connection between employees and the firm:
As a partnership, most of Blackstone’s investment professionals were compensated
Blackstone’s IPO reflect some of public private equity company’s advantage and also the special need for itself.
2. What are the built-in tensions with a public private equity? How does Blackstone’s attempt to reconcile them?
Brief Introduction
The Blackstone Group is an American multinational private equity, investment banking, alternative asset management and financial services corporation based in New York City.
Blackstone specializes in private equity, creditand hedge fund investment strategies, as well as financial advisory services Blackstone's private equity business has been one of the largest investors in leveraged buyout transactions over the last decade, while its real estate business has actively acquired commercial real estate.
The product of months of intense and secret analysis within the firm, the move- the sale of
10% of the general partner- was carefully planned to balance the interests of all parties involved. The structure made use of a specialized vehicle called a Master Limited Partnership form. On March 22, 2007, Blackstone rocked the investing world by announcing plans to go to public.
WHY go public? WHAT are the built-in tensions with a public private equity firm?
HOW does Blackstone’s structure attempt to reconcile them? IS Blackstone’s model the future for large scale PE? IF you were a limited partner (LP) in Blackstone, HOW would you view the structure Blackstone has put in place to go public? UNIT HOLDER?
OR LP?
First, public fund could be inexpensive source of capital for the firm: At the market average of 20x earnings, Blackstone’s implied cost of capital was 5%. Historically its investments had returned 30% to 35%, offering a good spread, especially as the firm, raising bigger funds, was increasing its own commitments to its deals.
Second, going public is a way of deepening the connection between employees and the firm:
As a partnership, most of Blackstone’s investment professionals were compensated