Squawk Box

Monday - Friday, 6:00 - 9:00 AM ET
Squawk Box

CNBC's Melissa Lee: What Investors Should Know About Blackstone IPO

CNBC’s Melissa Lee told “Squawk Box” there are five basic points to keep in mind about Blackstone Group’s planned IPO.

Blackstone Question

The planned deal, scheduled to price Thursday and trade Friday, is likely to be one of the biggest initial public offerings in U.S. history. Reportedly, the IPO is seven times oversubscribed, underscoring strong demand for the shares and suggesting a strong opening.

The five basic points are:

1. Lee said the IPO is worth about $40 billion and a 10% stake in the company will be offered to investors.

2. A bill pending in the Senate would tax publicly traded partnerships that derive profits from managing other people’s assets at the same rate as corporations, ending a two-decade old provision that grants partnerships a lower tax rate. If the bill becomes law, it would reduce Blackstone’s profits.

3. Shareholders have limited voting power and no right to elect general partners or directors.

4. Winners include AIG, which invested $150 million in Blackstone in 1998. The investment could now be worth as much as $2.8 billion. Co-founder Steve Schwarzman will pocket about $677 million in the deal and co-founder Pete Peterson will make about $1.8 billion.

5. The IPO probably doesn’t signal the top of the leveraged buyout boom and Blackstone Group probably gains an edge over its competitors by being among the first companies in the sector to go public.