Blackstone Group has agreed to pay $85 million to settle an investor class action lawsuit accusing the private equity giant of not disclosing bad investments before its $4.7 billion initial public offering in 2007.
The proposed deal follows more than five years of litigation between investors and Blackstone and helps the world's largest private equity firm avert a rare securities class action trial that was due to begin Sept. 16.
The settlement, disclosed in court papers filed Wednesday in U.S. District Court in Manhattan, also covers claims against individuals including Stephen Schwartzman, Blackstone's chief executive.
Blackstone spokesman Peter Rose declined to comment. The company continues to deny wrongdoing as part of the settlement, court papers state.
Lawyers for the plaintiffs said in court papers the settlement represents about 12 percent of the $691.5 million they believed were achievable at trial.
(Read more: We're Not Done Buying Real Estate, Blackstone Says)