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Blackstone IPO Mania! (Part II)

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One reason that you’ll read so many similar stories today about that Blackstone prospectus: everyone’s writing about the same stuff because there’s not much stuff to write about. It’s got more holes than the septum of a Goldman commodities trader! Jonathan Keehner at Reuters explains that investors will get “precious little insight into the affairs of the behemoth or any real control.” How do you spell “blank check?” Oh, right. Like this: Blackstone.
Jenny Andersonexplains why Blackstone is confident that it can convince investors to fork over money despite the blank-checky-ness of its prospectus. “Wall Street knows how to keep score. It’s called money,” Jenny writes. And Blackstone seems to mint it somewhere inside its offices.
Larry Ribstein says that the Blackstone structure may be a peak at a dawn of the new era: the Age of the Public Partnership. He’s not sure the publicly traded company model will work for private equity but he does think that Blackstone signals a move away from public companies toward partnerships. We’re reminded that this Blackstone structure will help the ‘Stoners avoid a lot of the things that currently plague public companies—activist shareholders, the threat of shareholder democracy, income taxes. The only question is how long lawmarkers will allow this exit from the corporate form if it starts to become popular.
The Financial Times says that the Blackstone IPO is all about acquiring “permanent capital” that doesn’t need to be returned to investors and will help the 'Stoners smooth out the business cycles that have plagued the private equity industry. It’s like cutting the Gordian Knot of question of a private equity “market top”: Blackstone may be able to keep to dealflow coming even if the credit market dries up because it will be able to tap into public equity market.
Why were Goldman Sachs and JP Morgan Chase left out of the Blackstone IPO bonanza? There’s been lots of speculation that “this time it’s personal” when it comes to Goldman. As DealJournal has pointed out, Goldman and Blackstone compete in a lot of the same businesses and the ‘Stoners might not have wanted to let team GS in to see the family jewels. One problem with this theory is that the Blackstone prospectus offers so little information, it’s not clear that any of the underwriters got to look very far into the Blackstone books. (Another theory raised by CNBC's Charlie Gasparino was that Schwarzman’s still bitter about former Goldman boss Hank Paulson getting tapped as Treasury Secretary.) The New York Post has another idea: the KKR IPO! “Those banks along with others are said to be working on the IPO of another big buyout firm rumored to be Kohlberg Kravis Roberts & Co., run by Wall Street legends Henry Kravis and George Roberts,” the Post’s Zachery Kouwe writes.
Last night a friend of ours wondered if Steve Schwarman might drop his $350,000 salary in the backseat of a cab after celebrating the IPO one night. Like a spare umbrella or a girl you met at The Anchor. “It is disclosed that Stephen Schwarzman's salary will be $350,000. But that's just the money he uses to tip coat-check ladies,” writes Justin Fox in the Curious Capitalist, a Time Magazine blog on business. Who knew Time writers were allowed to be funny?
Schwarzman’s salary leads Dana Cimillucato remark, “While it would be considered good take-home pay for most, for Schwarzman it probably would cover a mere slice of his birthday cake.” But don’t forget about his equity. He gets to have his cake and eat it too!
Dana also claims first prize for being the first to ask: Is Blackstone The New Goldman Sachs?