How many investment banks does it take to launch an IPO? It seems that no self-respecting private equity firm could do it without getting into double digits. Fortress had 10 underwriters on its deal. Blackstone has trumped that with 17, yes, 17 investment banks listed on its cover.
Two big ones, shunned the first time, have now been hired.
Goldman Sachs had been left off the deal because it was allegedly working an offering for a competitor. Blackstone even let in JPMorgan, despite having a grudge against the bank. JPMorgan had worked against Blackstone on the buyout of Equity Office Properties by backing a rival bid for real estate company Vornado. That ended up costing Blackstone an additional $3 billion on its biggest deal to date.
And then there is Lazard, Nikko Citigroup, SEB Enskilda, Wachovia, Bear Stearns and UBS, to name a few more. Rounding out the list is Wells Fargo, the lowly investment bank which barely registers on Dealogic’s radar because it hasn’t led an IPO since 2005.
Blackstone can’t be thinking that it needs so many banks to flog its shares. After all, founder Steve Schwarzman has been on the road for just a few days and investors are already buzzing about how they’ll have to fight for a piece of the deal. It’s hard to see half the bankers doing much more than clogging up the printer.
Perhaps, Blackstone has another reason. By hiring virtually every investment bank, it keeps people from criticizing its planned $33 billion valuation.
This is particularly important for say, Goldman, whose own stock trades on lower valuation multiples than those being suggested for Blackstone.
That discrepancy hasn’t gone unnoticed at the world’s leading investment bank. Yet, behind closed doors, it’s candidly stated that those who don’t agree to the value won’t be selling Blackstone’s IPO. Looks like Wall Street opted to keep its collective mouth shut.