Blackstone Group has finally to some extent lifted the curtain on its secretive investment partnership. In its filing with the U.S. Securities and Exchange Commission for its public share offering revealed that it earned more than $6 billion over the past five years while building a $79 billion portfolio of investments. Blackstone is considering to raise $4 billion in an initial public offering is giving investors a first look at the moneymaking power of the company that manages the world’s largest leveraged buyout fund.
Interestingly, the giant buyout firm will sell shares in its principal management company, not in its highly profitable investment funds, some of which have averaged annual returns of more than 20 percent during the past two decades.
The New York based company in its filing stated that Blackstone earned $2.27 billion last year, 71 percent more than a year earlier. Money-management fees were at $1.12 billion and investment gains totaled $7.59 billion, as the firm’s private-equity funds returned more than 20 percent and its real estate investments more or less doubled. However, the announcement made on Thursday halted more than a week of speculation that Schwarzman is planning to turn the firm into a public entity.
On the other hand, investors in Blackstone’s funds are reasonably suspicious of a public offering. They speculate whether decisions, like when to sell a company that has been taken private, will be made to manage earnings rather than maximize them over time. Investors in a broad-spectrum fear, if Blackstone is attaching its toe into those untrustworthy public markets, then they must be at the top of the market.
In an unusual move for would-be listed companies, Blackstone has warned that investors interested in short-term returns should not buy its stock. In addition to it, like an increasing number of US listed companies, Blackstone will provide no quarterly earnings guidance. The company strongly underlined that its main concern remained to drive returns for the pension funds and wealthy individuals that have traditionally invested in its funds for long-term returns.
