Tuesday Talkback

The sky is gray, Schilling’s arm was less useful yesterday than Gredenko’s and David Tom is the big winner of our March Madness Extravaganza. In other words, it’s time for some Tuesday Talkback.

Today’s edition is entirely devoted to The Blackstone Group IPO, since I haven’t done one of these since they filed. Tons of email on the topic, and here’s a brief sampling:

Casey: “This deal is being done to cash out the senior partners. Like the buyout firms that sold minority management company stakes in the late 1990s, I bet the next generation of managers is not too thrilled about this potential deal. I wonder if Mr. Schwarzman will be able to pull this off without losing some of the firm’s talent?”
Adam: “There is no doubt that a Blackstone IPO means that LPs’ negotiation power will weaken even more, as the GP will have a superior fiduciary responsibility toward its public shareholders that to its LPs. Why should LPs get more information on their investments, when such info might end up being used as ‘insider information?’ Everybody is going to have to get used to the Goldman model of blackbox investing… Funny how the world has turned since 2001.”
Sam: “This move should take the sting out of the negative publicity PE firms have been receiving lately (something Schwarzy is seriously worried about given his recent comments). To me, the underlying reason behind this IPO is that it confuses those arguing for tighter regulations for PE firms.”

Randall feels differently: “To me, this is Blackstone shooting the entire private equity industry in the back. Nothing is going to invite regulatory scrutiny more than having the market’s biggest player as a publicly-traded entity.”

Jared: “It’s interesting to see the news on Blackstone after watching Fortress’ success. Lots of folks are saying Fortress was the first to list, but don’t forget about the smaller but also very successful IPO last March of Zug, Switzerland’s Partners Group. IPO was a similar story…priced at CHF 63, shot up to CHF 84 on the first day and then has continued… Now at just shy of CHF 140. One of the highest performing European IPOs of 2006 and a market cap now of CHF 3.7bn+, but probably under the radar of many US institutionals.”

David: “This is just following the recent monetization trend that has been growing in Europe for a long time. It’s a smart move if you ask me, because they will have much easier access to capital.”

Ish: “They are going public because they saw executives at Fortress make a fortune (including some paper billionaires on the Forbes List). Can’t blame them really, can we?”

Jim: “I wonder if LBO firms going public might cut down on club deals in the future. If both Blackstone and KKR are public, for example, maybe each will feel that they can best raise their stock price by acting alone.”