We were wondering when the boys at the Wall Street Journal's Deal Journal would start picking fights. Scrapping is a time honored blog tradition; you can't really even call yourself a blogger if you haven't started at least a couple of brawls.
Today Deal Journal dusts off its knuckles against the jaw of the Old Grey Lady with a post under the delicious headline: Why the NY Times Edit Page Shouldn’t Cover Business. It seems the NY Times editorial page has been making some embarrassing sounds about the Blackstone IPO. (We wouldn't know. We read Gretchen Morgenson when we find ourselves wondering what the editorial page of the Times thinks.) And the Deal Journal boys let them have it.
After noting that the Times seems to have simply dreamed up a theory that private equity funds hate public markets--instead of, you know, depending on them to make money on exits--the Deal Journal spots an even more egregious problem.
More curious is the Times’s divination that with an offering “the group is saying that it expects to need more money going forward than it is likely to be able to raise privately.”
Granted, a WSJ article Saturday did point out that an IPO would give Blackstone “a source of permanent capital, since money raised from on the open market never has to be returned. Blackstone then wouldn’t need to depend on endless rounds of time-consuming fundraising from its usual investors.” But there’s a lot of daylight between lessening the reliance on fund raising and talk of a looming fund-raising gap. Indeed, the buyout firms, Blackstone chief among them, are flush with cash. Blackstone itself is in the process of raising $30 billion, including $10 billion for a real-estate fund.
Also, the roughly $4 billion the offering is expected to raise — which will likely be reduced by the not-inconsiderable amount Schwarzman and the other current owners will take away from it — is dwarfed by the size of the firms’ funds. And it is the management arm that Blackstone is reported to be taking public, not the funds themselves.
Ah. It's nice to see the kids coming into their own.
Why the NY Times Edit Page Shouldn’t Cover Business [Deal Journal]