Blackstone to Price IPO on Thursday, Earlier Than Expected
Blackstone Group, which manages the world's second-largest private equity fund, will set the price of its much-anticipated initial public offering on Thursday--roughly a week earlier than expected.
The New York-based buyout shop, which controls names like Madame Tussauds wax museums and real estate company Equity Office Properties Trust, could become a public company on the New York Stock Exchange by the end of the week.
Blackstone originally planned to float a 12.3% stake in its management division the week of June 25, but underwriter Morgan Stanley confirmed the change on Tuesday. It did not disclose a reason why.
There had been some concern that Blackstone Chief Executive Stephen Schwarzman would pull the offering due to potential changes in the tax laws. The firm warned investors last week a bill before Congress could reduce its earnings substantially in coming years.
Blackstone opposes efforts to tax it as a financial company rather than a partnership. But, if the proposed legislation in the Senate is passed, it would more than double the firm's taxes after a five-year grace period.
Blackstone, and other firms, have been able to take advantage of a two-decade old provision that allows investors in publicly traded partnerships to pay capital-gains taxes of 15 percent on their share of the firm's income. Corporations are currently taxed as much as 35 percent.
Regardless of the tax hit in five years, though, this week's offering could transform the company into one with a market value of about $32 billion.
As the terms currently stand, the deal is expected to raise between $3.87 billion and $4.14 billion, with shares expected to price between $29 to $31. If the underwriters exercise their option for extra shares in full, the total IPO would be worth $4.75 billion.
Also holding major stakes in Blackstone will be China's government, which in May invested $3 billion in the buyout shop. The company's senior executives will hold more than 70 percent of the newly floated management division.
A spokesman for Blackstone would not comment. The company will trade with the ticker symbol "BX" on the NYSE.