Blackstone Files For $4 Billion IPO, Reveals Untold Secrets

In a revealing S-1 filing Thursday, secretive private-equity firm Blackstone Group disclosed it earned over $6 billion in the past five years during which its investment portfolio bulged to about $79 billion. In 2006 assets under management went from $54 to $69 billion; thus far in 2007, the company has added another $9 billion in assets. The company's private-equity business, which accounts for $31 billion of its funds, has made an average 22.8% over the last 20 years, during which the S&P 500 made 11.1%; other private-equity firms averaged 13.2% over the last decade. But it's not up for grabs. Blackstone plans to raise $4 billion in exchange for a 10% stake in its management company, while its investment funds will remain private; the management company made $2.3 billion in 2006. The IPO's underwriting, which could generate $150 million in fees, is being managed principally by Morgan Stanley and Citigroup, along with Merrill Lynch, Lehman Brothers and Deutsche Bank. To many's surprise, Goldman Sachs was not included in the deal, understood by some as a rebuff for its high-handed presence in private-equity deals. Wall Street is now speculating which private-equity firm will be next to tap the public's coffers; names being tossed around include Carlyle, KKR, and Oaktree Capital. On February 9, Fortress Invesment Group became the first private-equity firm to list itself publicly in a wildly successful IPO; from an initial price of $18.50, shares jumped to $35, and closed that day at $31. It closed Thursday at $27.90.

Sources: S-1 Filing, Wall Street Journal, MarketWatch
Commentary: Blackstone S-1 Filing: That's a Lot of Money • Private Equity Leaders: Seeing the Big Picture • Implications of the Blackstone IPO
Stocks/ETFs to watch: Fortress Investment Group LLC (FIG), Morgan Stanley (MS), Citigroup Inc. (C), Merrill Lynch & Co. Inc. (MER), Lehman Brothers Holdings Inc. (LEH), Deutsche Bank AG (DB), Goldman Sachs Group Inc. (GS)

Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.