Good times are back for our financial leaders; the private equity shops now can unload onto the public the companies they took over (and usually loaded with debt), and investment banks can make the big fees for the transaction. If you missed last week's explanation of how public equity works please see [Oct 6, 2009: Private Equity Skewered in New York Times]. We're back in business, America - our number 1 product, financial innovation, has returned. That whole financial calamity thing over the past 2 years is like a bad dream ... never happened.
We unloaded some Blackstone Group (NYSE:BX) last Thursday for a quick 1 week trading gain, but still hold a good amount of exposure as this is our one real exposure to the oligarchy that dominates the country.
With the tsunami of nearly free money that the Federal Reserve is handing out - which has little need in the real economy but can be used to bloat asset values in the Wall Street economy - it won't just be Team Health Holdings sold off [Oct 6, 2009: Blackstone Group Holding 'Tea, Health Holdings' Files $100M IPO], but now there is the potential for a whole barn load of names. I can hear the fist bumps in the halls of the Federal Reserve & Treasury ("Mission Accomplished") from here.
- Blackstone Group (BX) has called the bottom of the market and plans to sell several of its portfolio companies, both to the public via IPOs and privately to trade buyers and other private equity companies, a person familiar with the situation told Dow Jones Newswires Monday.
- In a letter sent Friday to investors, Blackstone's Chief Executive Steve Schwarzman said the buyout group had slated eight companies for initial public offerings and was in the process of selling five companies it owns. (from other sources it appears 4 of those 5 to be sold were already announced, and one is imminent)
- Steve Schwarzman, Blackstone’s founder, told investors in a letter sent on Friday: “We see the world changing once again. At least for private equity, the worst is behind the industry.”
- Mr Schwarzman said Blackstone was in the process of selling five companies it owns – at values twice as high as those estimated at the end of 2008. (realizations is a fancy way to say "sales" - but if you carry around a MBA you need to use words that are more than 1 syllable) Investors are likely to receive about $2.8bn (€1.9bn) as their share of the profits, with about $1.2bn coming from the expected sale of Kosmos Energy.
- Blackstone is considering listing eight other companies in which it has invested collectively more than $4bn, during the next year, and the “expected valuation compares very favorably to our costs, in some cases significantly”. (translation: once we unload these to the public, we're going to be in the money... big time. And that's over and above what we charged for our management fees - boo yah, Ben Bernanke.)
Long Blackstone Group in fund; no personal position