Blackstone IPO: $31/Share, Upper-End of Range

Blackstone priced its much-anticipated IPO at $31/share, the top-end of its $29-31 range. Issuing 133.3 million shares, the IPO -- which represents a 12% stake in the firm -- raised $4.13 billion. The sale values the company at $33.5 billion. A last-minute request from House Oversight and Government Reform Committee Chairman Henry Waxman (D-Ca.) that the SEC delay the IPO until after Congress holds hearings to determine if the offering exposes unsophisticated investors to undue risk, was refused. Private equity firms like Blackstone and rival Fortress Investment Group are currently taxed at a 17% partnership rate, not the 35% that applies to other corporations, a loophole that has recently been challenged in congress. Last Friday Blackstone warned investors that proposed changes in tax legislation might affect its business and share valuation. The offering was said to be 5-to-6-times oversubscribed, driven by international investors. Blackstone confirmed that it was also selling $3 billion in shares "to an investment vehicle established by the People's Republic of China." The company will use the money raised to expand buyout and asset management units, and pay founders Stephen Schwarzman and Peter G. Peterson a combined $2.33 billion. Shares sold for 12.6x 2006 earnings of $2.66 billion; Fortress shares, up 40% since its IPO, now trade at 21x 2006 earnings. Shares begin trading Friday on the NYSE under the ticker BX.

Sources: Press release (.pdf), MarketWatch, TheStreet, Bloomberg
Commentary: Blackstone Group IPO to Take Wall Street By Storm • Blackstone Group IPO Trades Today - I Will Stay Away • Why Are Lawmakers Afraid of the Blackstone IPO?
Stocks/ETFs to watch: Blackstone Group LP (BX). Competitors: Fortress Investment Group LLC (FIG)
Related: Company overview, Wikipedia on Blackstone Group

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