Filed under: The Blackstone Group, Private equity industry, Blackstone, IPO, 2007
The chart to the right shows the performance of Stephen Schwarzman’s Blackstone Group (NYSE: BX) since its IPO earlier this year. Just by looking at the stock price, you can tell that Mr. Schwarzman has some explaining to do.
At the time of the much-anticipated IPO, a lot of people, myself included, were warning investors to stay far, far away. It didn’t appear that there was any reason for Blackstone to go public other than to allow insiders to cash in some of their chips at the absolute top of the private equity boom.
Of course, that’s exactly what happened, and the IPO’s poor performance has only added to Schwarzman’s less than stellar reputation. In a current speech covered by The New York Times, Schwarzman ran through all the traditional arguments about why private equity is good for the economy. He also added a somewhat bizarre twist, saying that the industry will help to mitigate the negative consequences of globalization.
Schwarzman can, and should, defend his industry all he wants. But the fact that he took the company public in what looked like a pretty self-serving money grab — the IPO valued Schwarzman’s stake at more than $7 billion — will probably sully his reputation forever.
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