The Blackstone Group (Private Equity)

  • Overview

King of Wall Street

The Blackstone Group's CEO Stephen Schwarzman has a reputation in the press as the "King of Wall Street" for the gains he's made with the firm since 1985.  Yet this royal title could also easily be applied to Blackstone itself which rules the world of private equity with its splashy high-profile deals, $30.6 billion assets under management and returns of 30.8 percent annually in its corporate private equity portfolio since 1987.  As of March 31, 2008, Blackstone's private equity division has invested in 126 different companies with a total transaction value of $284 billion.

The financial powerhouse offers its services through four main business units: the private equity group; the real estate group; the marketable alternative investments unit which includes funds of hedge funds, mezzanine funds, senior debt vehicles, distressed securities hedge funds, equity hedge funds and closed-end mutual funds; and financial advisory services, which includes mergers and acquisitions advisory, restructuring and reorganization advisory, and fund placement service.  Blackstone has approximately 1,300 employees with offices in New York, Atlanta, Boston, Chicago, Houston, Dallas, Los Angeles, San Francisco, London, Paris, Mumbai, Tokyo and Hong Kong.

From small things

Blackstone was not always the industry giant that it is today.  In 1985, former Lehman Brothers executives Peter G. Peterson and Stephen Schwarzman decided to leave their posts on Wall Street and take their chances with their own firm.  They started their boutique mergers and acquisitions firm with a staff of four, including Peterson and Schwarzman, and $400,000 in startup funds.  They named the firm Blackstone as a derivation of their last names from foreign languages, Schwarz is German for "black" while Petra means "stone" in Greek.  After the company's seemingly humble beginnings, Blackstone rocketed to success fairly quickly.  By 1987, its first buyout fund closed with $810 million, the largest first-time fund ever at the time.

Going public

This traditionally secretive private equity firm sent waves of controversy through the industry when it announced in March 2007 that it would go public.  In the debate of whether or not it is preferable for private equity firms to be public or private, Blackstone set a powerful standard when its IPO debuted in June 2007 at $31 a share and then quickly climbed to $38 a share.  Due to the summer's volatility in the market, however, Blackstone stock soon dropped.  Since then, the stock has lost about 50 percent of its value.  Despite the subsequent stumbles, Blackstone's much-hyped debut proved that private equity going public may just be the wave of the future.

Diverse portfolio

Blackstone's private equity investments span a range of industries and also vary greatly in size from company to company.  Though tough markets have brought tough times to the mighty Blackstone private equity empire in the form of Deutsche Telekom, a German telecommunications company that suffered badly in the stock market in 2008, other investments prove to be more lucrative.  Right now, the firm's portfolio includes a $1.2 billion investment in Alliant Insurance company, an American commercial insurance brokerage; a $421 billion investment in Vistar Corporation, a food services company; a $1.3 billion investment in Klocknar Plentapast, a German pharmaceutical and medical devices company and a $16 billion investment in Freescale Semiconductor, one of the largest semiconductor firms in the world.  The firm also has plans to greatly expand its holdings in the future, in July 2008, Blackstone acquired security company Allied Barton for an undisclosed sum.  It is also part of a consortium consisting of Bain Capital and NBC Universal which purchased The Weather Channel for $3.5 billion in July 2008.



The Blackstone Group (Private Equity)


345 Park Avenue
31st Floor
New York, NY 10154
Phone: (212) 583-5000
Fax: (212) 583-5712
www.blackstone.com

STATS


  • Employer Type: Public
  • Stock Symbol: BX
  • Stock Exchange: NYSE
  • Chairman & CEO: Stephen A. Schwarzman
  • 2008 Employees: 1,340

Key Financials

  • 2008 Income: $-1,163 million
  • 2008 Revenue: $-349 million

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