The Blackstone Group is deep into preparations for an initial public offering that could be filed in the next two weeks, reported CNBC's David Faber, citing people familiar with the private equity firm's plans.
Bankers and Blackstone attorneys are in the process of writing a prospectus, Faber said, and Blackstone has been "sounding out" partners that provide equity for its deals about whether they'd object to an IPO. Wall Street sources told Faber the company is working with investment banks Lehman Bros. and Citigroup to launch the IPO.
"While a final decision on whether to go public has technically not been made and rests squarely with the firm's Chairman and Chief Executive Stephen Schwarzman, people familiar with Blackstone's plans tell me the decision has been all but made and the filing will soon follow," Faber said.
Schwarzman himself would stand to score a financial windfall from an IPO. The executive is believed to own about 40% of the firm. In addition, his current annual salary from Blackstone is estimated at more than $500 million.
Source: Glencore.com
Chemoil Energy
Banking sources put Blackstone's market value easily in excess of $20 billion, said Faber, who was first to report the story on CNBC's Squawk on the Street Friday.
Schwarzman was non-committal when asked about by CNBC the possibility of an IPO earlier this week. A Blackstone spokesman declined comment.
"The irony that the firm which has taken some of the nation's largest companies private will itself become public is not lost on Blackstone's principals," Faber said.
"There's a structural issue with public companies today where there are certain things that they're not able to do that private companies can do," Schwarzman recently told CNBC's Maria Bartiromo, adding that public firm's emphasis on quarterly earnings discourages "risk-taking on the part of corporations."
Last month, Blackstone won a protracted bidding war for Equity Office Properties Trust, paying $39 billion for the office buildings landlord. Just this week, Blackstone and General Electric's GE Capital Solutions Unit said they will jointly acquire mortgage and vehicle fleet management company PHH for $1.8 billion in cash.
Largest Blackstone Acquisitions: Blackstone has either individually acquired or teamed with other acquirers in at least 11 deals worth more than $4 billion since 2002.
| Acquisition | Value (in billions) | Date Announced |
Equity Office Properties | $37.71 | 11/19/2006 |
| Freescale Semiconductor | $17.45 | 9/15/2006 |
| Biomet | $10.97 | 12/18/2006 |
| SunGard Data Systems | $10.84 | 3/28/2005 |
| TDC | $10.62 | 11/30/2005 |
| Michaels Stores | $5.60 | 6/30/2006 |
| CarrAmerica Realty | $4.80 | 3/6/2006 |
| Trizec Properties | $4.75 | 6/5/2006 |
| TRW Automotive | $4.72 | 11/17/2002 |
| Travelport | $4.30 | 6/30/2006 |
| Scottish & Newcastle | $4.17 | 10/6/2003 |
The success of Fortress Investment Group's public offering caught the attention of Blackstone and other big private equity firms besides. Last month Fortress opened trading at $35 after being priced at $18.50 a share.
Banking and legal sources told Faber that Apollo, KKR and Carlyle Group are all exploring public offerings that could take place this year or next.
An IPO for Blackstone, the largest private equity firm, would likely be helped by its business in the area of alternative assets. Blackstone has a large presence in the debt and real estate businesses.