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Blackstone IPO pays off for founders |
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Tuesday, 12 June 2007 |
Stephen Schwarzman and Peter G. Peterson, who started Blackstone Group LP two decades ago with $400,000, stand to collect a combined $2.33 billion from the largest initial public offering by a leveraged buyout firm.
The 60-year-old Schwarzman will receive $449.2 million for selling some of his holdings, leaving him with a 24 percent stake, New York-based Blackstone said Monday in a filing with the Securities and Exchange Commission.
Peterson, 80, who's retiring next year, will get $1.88 billion and retain 4 percent of the company.
Blackstone, manager of the world's second-largest buyout fund, plans to go public as soon as this month after spending $199 billion to acquire companies since it was founded in 1985. The payouts to Schwarzman and Peterson top those earned by partners at Goldman Sachs Group Inc. and the founders of Google Inc. when their companies went public.
"The world has shifted to private-equity and hedge-fund companies," John Challenger, chief executive officer of executive-search firm Challenger Gray & Christmas Inc. in Chicago, said Monday in an interview. "That's where the real money is and that's going to draw talent."
Blackstone will have a market value of $32.4 billion, with 12.3 percent of the stock held by the public and China's state investment company buying a 9.7 percent stake in a private transaction. Schwarzman's holdings will be valued at $7.73 billion if Blackstone's shares sell for $30 apiece in the IPO, according to the filing. Peterson's remaining shares will be worth $1.31 billion.
"The equity values are large enough that you can't ask the junior partners to buy you out at full value," said Frederick Joseph, managing director of Morgan Joseph & Co. in New York, and former chief executive officer of Drexel Burnham Lambert Inc.
Schwarzman made $398.3 million last year, according to the filing. Peterson earned $212.9 million. That tops the $54 million Goldman Sachs paid to CEO Lloyd Blankfein for running the world's most profitable securities firm.
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Last Updated ( Thursday, 21 June 2007 )
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