By Edward Evans and Elisa Martinuzzi, Bloomberg
London: Blackstone Group LP plans to raise as much as $7.75 billion selling stock to the public and the Chinese government, becoming the biggest private equity firm to go public.
Blackstone is selling as many as 153.3 million shares for $29 to $31 each to raise $4.75 billion, the New York-based firm said in a Securities and Exchange Commission filing today. The firm boosted the offering by almost 20% after it agreed to sell a $3 billion stake to the Chinese government yesterday.
The sale will value Stephen Schwarzman and Peter G. Peterson’s firm at as much as $33.6 billion, about a third of Goldman Sachs Group Inc.’s market value. Blackstone’s owners will get about $3.9 billion in cash from the IPO and keep a majority stake in the company. The firm is going public after 22 years of private ownership to expand into new businesses and buy out partners as they leave.
Blackstone follows rival Fortress Investment Group, which had an IPO in February. “Once people understand the market, understand the opportunity, they are ready to buy,” said Matthew Rhodes-Kropf, a finance professor at Columbia University’s Business School. Fortress shares have gained BY 51% since their IPO.
China’s soon-to-be-formed State Investment Co. will buy a non- voting stake of less than 10 %, Blackstone said yesterday, giving the firm an ally as it expands into the country’s private- equity market. The investment company will hold its Blackstone shares for at least four years and isn’t allowed to invest in a competing private-equity firm for a year.
China, the largest holder of US government debt behind Japan, is creating the investment company to buy potentially more lucrative assets such as private equity. Swelled by export revenue, foreign exchange reserves rose by a record $136 billion in the first quarter to $1.2 trillion, the most in the world, according to China’s central bank. Most of it is invested in sovereign debt.
Blackstone is going public as the lowest borrowing costs in a decade have allowed LBO firms to take companies private at a record pace. New York-based Fortress was the first US. manager of hedge funds and private-equity to sell a stake to investors, raising $635 million in February. Apollo Management LP founder Leon Black is also considering whether to go public.
Blackstone raised $15.6 billion in July for its latest fund, second to the $20 billion gathered by Goldman Sachs Group Inc.
Morgan Stanley and Citigroup Inc. are managing the Blackstone IPO. Merrill Lynch & Co., Credit Suisse Group, Lehman Brothers Holdings Inc. and Deutsche Bank AG are assisting. The stock will be listed on the New York Stock Exchange under the ticker symbol BX.