IPO Windfall Coming for Blackstone Group?

| About: The Blackstone (BX)

Is The Blackstone Group (NYSE:BX) headed for an IPO bonanza? According to MarketWatch, BX has eight IPO's lined up and is selling five more companies at double their value since end-2008.

In my previous post, wherein I made a strong case for BX, I described the company as very highly-leveraged to any recovery in asset prices. I also like their chairman, Steve Schwarzman. While BX is known for private equity, Schwarzman has also slowly built up the fund of funds business, and they are now the new market leader in terms of funds under management. The stock looks ready to gap up about 6% ... too bad it didn't give enough of a setup for me to buy some shares for the model portfolio.

According to reports:

  • Blackstone Group is planning to list up to eight companies it owns and sell at least five more, raising at least $2.8 billion, according to published reports Monday.
  • According to a report in the Financial Times, Steve Schwarzman, the company's founder, wrote to investors on Friday saying that, for private equity, "the worst is behind the industry."
  • The private-equity business suffered during the twinned financial and credit crises of the last 18 months. Firms like Blackstone profit by buying up businesses and sprucing them up before reselling. As credit tightened and interest in mergers and acquisitions dried up, the business model suffered.
  • As the crisis has eased and the markets rose sharply in the last 6 months, both merger and IPO activity has picked up again.
  • Schwarzman said the company is in the process of selling five companies at values twice as high as they were estimated at the end of 2008.
  • Investors are likely to receive about $2.8 billion as their share of the profits, with $1.2 billion coming from the expected sale of Kosmos Energy, the report added.
  • In addition, Blackstone is considering listing eight other companies in which it has invested collectively more than $4 billion.
  • According to a report from Reuters, Blackstone is also planning an IPO for hospital staffing firm Team Health.

Well I won't be chasing this stock given that the market has been up for five straight days. I'd buy it on a pullback in the next few days or weeks though.

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