In a CNBC EXCLUSIVE, David Faber reports The Blackstone Group is deep into preparations for an initial public offering that could be filed in the next two weeks, citing people familiar with the private equity firm's plans.
Goldman Sachs 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.
"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 Steven 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.
Schwarzman was "non-commital" when asked about the possibility of an IPO earlier this week, Faber said.
Please see unofficial transcript below. All references must be sourced to CNBC.
DATE: March 16, 2007
PROGRAM: "Squawk on the Street"
TIME: 9:00 am ET
DAVID FABER: THANK YOU ERIN. AN IMPORTANT STORY I THINK THIS MORNING FOR MANY PEOPLE, THE BLACKSTONE GROUP IS DEEP INTO PREPARATIONS FOR AN INITIAL PUBLIC OFFERING THAT COULD BE FILED FOR IN THE NEXT TWO WEEKS ACCORDING TO PEOPLE FAMILIAR WITH ITS PLANS. GOLDMAN SACHS IN CONJUNCTION WITH BLACKSTONE'S LAWYERS ARE CURRENTLY CIG A PROSPECTUS FOR THE OFFERING AND BLACKSTONE HAS BEEN SOUNDING OUT ITS LIMITED PARTNERS, THE INSTITUTIONS THAT PROVIDE EQUITY FOR ITS DEALS, ABOUT WHETHER THEY WOULD OBJECT TO SUCH A MOVE. WHILE A FINAL SIGS ON -- DECISION ON WHETHER TO GO PUBLICLY HAS TECHNICALLY NOT BEEN MADE AND RESTS WITH STEVE SCHWARZMAN, PEOPLE TELL ME THE DECISION HAS ALL BUT BEEN MADE AND THE FILING WILL SOON FOLLOW. MR. SWARTZMAN HAS NOT CALLED BACK AND A BLACKSTONE SPOKESMAN HAS DECLINED TO COMMENT. THE COMPANY THAT WILL BECOME PUBLIC IS NOT LOST ON PRINCIPLES. MR. SWARTZMAN HAS EXPLAINED WHY COMPANIES PREFER TO GO PUBLIC RATHER THAN STAY PRIVATE.
STEVE SCHWARTZMAN (ON TAPE- INTERVIEW WITH MARIA BARTIROMO): THAT'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 AND THAT ARBITRAGE IS BENEFICIAL TO THE PRIVATE EQUITY FIRMS, AND THE EMPHASIZE ON QUARTERLY EARNINGS WHICH DISCOURAGES RISK TAKING ON THE PART OF CORPORATIONS.
DAVID FABER: BUT AN IPO WOULD CREATE ENORMOUS WEALTH FOR THE FIRM'S PARTNERS, LED BY SCHWARZMAN WHO IS BELIEVED TO OWN 40 PERCENT OF THE FIRM. AND THE OFFERING WOULD GIVE BLACKSTONE THE -- BLACKSTONE THE ABILITY TO USE STOCK. WHEN ASKED ABOUT THE POSSIBILITY OF AN IPO BY MARIA, MR. SCHWARZMAN WAS NONCOMMITAL.
STEVE SCHWARTZMAN (ON TAPE-INTERVIEW WITH MARIA BARTIROMO): I THINK EVERY BANKER HAS TALKED TO EVERY COMPANY THAT'S IN THE PRIVATE EQUITY AND HEDGE FUND BUSINESS ABOVE A CERTAIN SIZE. I MEAN, IT'S LIKE A NATIONAL SPORT AT THIS POINT.