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Blackstone IPO: A Bigger Offering But A Smaller Firm?

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The Blackstone public offering is back in the news. The private equity firm today released a revised prospectus in a filing with the Securities and Exchange Commission, revealing for the first time the price it expects its shares to fetch at the initial public offering—between $29 and $31 dollars. Blackstone also said it expects to sell 133.3 million units. (The revised prospectus also revealed that Blackstone will be getting another infusion of cash from a different equity sale—the sale of limited partnership shares to China for $3 billion. More on that later.)
At the mid-range of the expected price—$30 a share—the offering would fetch $4 billion, which the number everyone was talking about when the offering was first announced. In the original prospectus, DealBook reminds us. Blackstone had estimated that $4 billion was the upper-end of what it expected from the IPO. Today’s pricing suggests that Blackstone might get as much as seven hundred and fifty million more than that, for a total of $4.75 billion.
DealBook points out that while the estimated share price indicates the IPO might fetch more than expected, the new prospectus also suggests that the firm might be valued lower than the $40 billion often cited in reports on the IPO.

The proceeds may be getting larger, but the new filing also suggested that Blackstone won’t quite reach the $40 billion valuation that was previously reported. Based on the firm’s own estimate of 1.085 billion units outstanding after the offering and a per-share price of $31 — the high end of the expected range — that would value the firm at about $33.6 billion.
By way of comparison, that figure would make Blackstone larger than securities firm Bear Stearns, which has a market capitalization of about $21.9 billion, but smaller than Lehman Brothers, whose market cap is about $38.9 billion.

Eddy Elfenbein points to another comparable—Fortress Investment Group, which sold shares in an IPO earlier this year. At the high end of the price range, Blackstone would be valued at about three times Fortress, Elfenbein writes on his Crossing Wall Street blog. Of course, that might be comparing apples to oranges. Fortress has a much higher market capitalization than its IPO price would have suggested in advance—shares traded up as much as 68% as soon as they hit the public exchanges. It’s possible Blackstone’s shares saw a similar rise on the first day of trading. “Of course, if Blackstone’s shares rise after the I.P.O., its market cap could easily top the $40 billion mark,” DealBook writes in its initial reading of the new prospectus.
There will no doubt be lots more on this story once everyone has a chance to read through the new prospectus.
Blackstone Seeks Up to $7.75 Billion in Stock Sales [Bloomberg]
Blacktone Prospectus []
Blackstone I.P.O. Could Reach $4.75 Billion [DealBook]
The Blackstone IPO [Crossing Wall Street]