CHINA'S MOVE RAISES ROOF ON BLACKSTONE IPO By Francesco Guerrera and Ben White in New York and Sundeep Tucker in Hong Kong
Tuesday, May 22, 2007
Blackstone's executives, led by founders Stephen Schwarzman and Pete Peterson, will receive $4.5bn from the buy-out group's listing after a $3bn investment by the Chinese government prompted them to nearly double the size of the offering to $7.8bn.
The move will turn Blackstone's initial public offering into the world's second largest this year and enable its partners to cash in part of their stakes during an unprecedented boom for the private equity industry.
The hunger to share in private equity's riches was underlined at the weekend by the Chinese government's surprise decision to spend $3bn of its foreign exchange reserves on a stake of about 9.9 per cent in Blackstone.
In a regulatory filing issued yesterday, Blackstone said that it would increase the size of the IPO from the planned $4bn to up to $7.8bn by selling a stake of about 10 per cent to the public and a further 9.9 per cent to China's soon-to-be-formed foreign exchange agency.
The shares in the IPO, which is expected in the next few months, will be priced at between $29 and $31, valuing Blackstone at $33.6bn.
“Our existing owners will receive $3.9bn of the proceeds . . . or approximately $4.47bn”, if, as likely, Blackstone's advisers sold all the shares in the listing, the filing said.
The document did not reveal how much each of Blackstone's founders and other dozen top executives would sell into the IPO. However, the buy-out group had previously said that Mr Peterson, 80, would retire at the end of 2008 and would be allowed to sell his stake in the listed vehicle immediately.
Blackstone also said in the filing that it would contribute $150m raised in the offering to the Blackstone Charitable Foundation, which is expected to give to educational, cultural, scientific and other organizations as well as to charities.
The news came as private equity executives and business and political leaders said the Chinese investment in Blackstone was more than just a financial coup for the buy-out group.
They said that the backing of a powerful Beijing agency would help Blackstone navigate China's treacherous market for private equity deals, which have proven difficult to come by for rival buy-out groups such as Carlyle and Kohlberg Kravis Roberts.
