Launching The BX Missile

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Shares of the Blackstone Group began trading on the New York Stock Exchange this morning under the ticker symbol BX at $36.45, an 18% premium from the initial public offering price. The opening was slightly behind schedule as the specialists handling the stock sorted out some pretty wild bid margins. One buyer asked for a hundred shares at a price of $1000 a share, according to CNBC.
The IPO raised $4.13 billion dollars last night, making it the sixth largest in US history and the largest in the last five years. (AT&T, Kraft, UPS, CIT Group and Conoco were all larger)—until you adjust for inflation and the relative size of capital markets. The IPO was massively oversubscribed and we’re told that many of the institutional investors came away with far fewer shares than they would have liked as the underwriters stretched the offering to let in as many of the big institutions and funds as possible. Admission to the IPO was more or less the hottest ticket in town last night (arguably hotter, even, than the party at Four Seasons thrown for debut novelist Holly Peterson, the daughter of Blackstone co-founder Pete Peterson).
A trader familiar with the plans of a few prominent institutional investors we spoke with said they wouldn’t be attempting to snap up more shares at the opening this morning, preferring to give the stock “room to breathe” after the IPO. He added that many investors were pleased that Blackstone didn’t try to push the IPO price higher despite the strong demand, a move which more or less guaranteed the stock would open significantly higher than the price they paid.
The Blackstone IPO has been one of the most closely watched—and fiercely challenged—events in recent Wall Street history. Novelist Tom Wolfe even showed up on the exchange floor to watch the action this morning, remarking that he came to witness “the end of capitalism as we know it.” Recent weeks have seen challenges from lawmakers who sought to block the IPO, threats of legislation that would raise taxes paid by private equity firms, concerns over Blackstone head Steve Schwarzman’s very publicly lavish lifestyle, and last minute changes in the unusual way the company accounts for its earnings.
But none of this seems to have dampened interest in owning the shares of Blackstone.
Schwarzman shrugged off the tradition of ringing the opening bell to mark the new listing. Some have said this was a move to lower his profile. (There’s been widespread criticism from others in private equity that Schwarzman has too heavily courted publicity, perhaps inviting political blacklash). Others have said that Schwarzman’s absence was intended to project insouciance and confidence about the stock offering.

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