What’s So Great About Being Public, Anyway?

The problem with being public is having to worry about your stock price.

While the Dow Jones Industrial Average boomed up 400 points today in response to last week’s market crash, publicly-listed private equity firms are not seeing any benefits from the boost. Their stocks are still languishing within pennies of last week’s lows.

We would say this discouraging trend of depressed stock prices would discourage KKR from transforming their “un-IPO” into a real IPO (sorry, Primack) – but let’s be realistic: That deal has died and come back to life so many times that it’s like Rasputin. KKR is determined to go public even if it has to do so among the dessicated carcasses of Western civilization in a Roland Emmerich film.

But will its rivals’ stomachs be strong enough to weather these lows? Blackstone Group’s stock has been recovering for over six months from its July low of $8.54, in October going as high as $17.22 per share. On Tuesday, May 4th, just two days before the crash, Blackstone’s stock closed at a healthy $13.84. At the time of the stock market crash, the share price fell to $12 – a loss of 13% of value, or $2 billion in capitalization in just two days. As of today, Blackstone stock opened at $12.95, still without recovering its losses.

“Markets are great, except when they get it wrong,” Blackstone Group spokesman Peter Rose told peHUB.

Some other PE-focused firms must be feeling the same resentment. KKR Financial: $7.48 during Thursday’s crash, closed not impressively higher at $8.16 on Monday. Evercore Partners: $33.70 at the time of the crash, $35.46 at Monday’s close – only a 5% increase overall, not terribly close to recouping its full value.

Apollo Investment, a BDC, was riding fairly high last week, having just closed a successful $200 million stock offering to raise money and its stock price at $12.08 a share two days before the crash. At the time of the crash, Apollo’s stock fell to $10.10, a 16% decrease over two days. Today, Apollo’s stock closed at $11.37 on Nasdaq.

S&P’s Private Equity Index, meanwhile, similarly made only a mild recovery from the Thursday malaise.

It may all seem very unjust to the industry that the markets are not allowing private equity stocks to rocket while the industry appears to be on the edge of an unlikely boom. Maybe, as Primack suggested, the markets are throwing up their hands at being able to correctly value a private equity firm; there are few people who can claim to know how to do it perfectly. But rational or not, that’s the market, and private equity seems to have settled in for a long ride.