Stephen A. Schwarzman, president and CEO of the Blackstone Group |
Private equity giant Blackstone said on Monday it planned a partial stock flotation
and a stake sale to a Chinese state investmentghgh firm that together could raise
more than $7 billion (Rs 28,700 crore).The initial public offering (IPO) marks the
first step into the world of publicly-traded and regulated stocks for a company
at the heart of the boom in private equity deals. For China, flush with $1.2 trillion
in foreign exchange reserves, the deal agreed on Sunday with Blackstone represents
a fledgling state investment vehicle’s launch into the high-risk end of
Western capital
markets.
Blackstone’s alternative asset management businesses include the management of corporate
private equity funds, real-estate opportunity funds, hedge funds and senior debt
vehicles. Private equity firms typically buy troubled businesses, restructure them
and sell them at a hefty profit.
“We intend to continue to follow the management approach that has served us well
as a private firm of focusing on making the right decisions about purchasing and
selling the right assets at the right time and at the right prices,” Blackstone
said in its filing Monday with the Securities and Exchange Commission (SEC).
China’s major investment came on the eve of top-level US-China trade talks on Tuesday
in Washington and aimed at defusing frictions, such as the US’s massive trade deficit
with China. Blackstone can expect to reap significant clout from the transaction,
analysts said. “The deal gives the buyout firm significant leverage in its quest
to expand into China’s private equity market,” said Kimberly DuBord of Briefing.com.
The Blackstone Group’s foray into the stock market is unusual for private equity
groups, which traditionally prefer to keep their financial and strategic information
confidential.Blackstone said it would float 133.3 million shares on the New York
Stock Exchange in an IPO that could raise $3.86 to $4.13 billion.
It anticipated the IPO shares would be priced between $29 and $31 and the shares
floated would represent 12.3% of the firm’s capital.
An additional 20 million shares will be floated if demand warrants, raising a total
$4.75 billion in the listing, the group said. On Sunday, Blackstone and the soon-to-be-established
Chinese state forex firm, provisionally named the State Investment Company (SIC),
announced that SIC had agreed to buy $3 billion worth of Blackstone non-voting shares
at a unit price of 95.5% of the IPO price.“We are very pleased to be able to make
the State Investment Company’s very first in...