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Wednesday, January 28, 2009

Cut off by lenders, Blackstone tries investment banking to stay afloat

"Blackstone founder Stephen Schwarzman, the son of a dry goods store owner in Philadelphia, was swagger personified" during the private-equity and leveraged buy-out boom of the mid-2000s, writes Bloomberg's Jason Kelly. "He owns five trophy homes in Manhattan, East Hampton, Florida, the South of France and Jamaica," and pocketed nearly $700 million from Blackstone's 2007 initial public stock offering, as Blackstone-funded deals "helped inflate the credit bubble...

"Now Schwarzman and his rivals -- Henry Kravis of KKR & Co. and David Rubenstein of Carlyle Group -- are trying to endure the hangover from their binge. Buyout firms went on a record-breaking shopping spree in 2006-07, saddling themselves with $1.5 trillion in assets that they intended to sell at a profit. Since then, they haven’t been able to find buyers for their companies, depriving them of their main source of income: the 20 percent fee they reap from a profitable sale." And banks won't finance more deals.

Blackstone, the largest of the buyout firms, is trying to stay afloat by advising American International Group how to raise cash by selling assets, for example. To read the story, copy this into your browser:
http://www.bloomberg.com/apps/news?pid=20601109&sid=aJJx48OeDvX0&refer=home


Posted by Joseph N. DiStefano @ 7:21 AM  Permalink | 1 comment
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About Joseph N. DiStefano
Joseph N. DiStefano writes this blog to feed his PhillyDeals column in the Philadelphia Inquirer. Joe has been a member of Bloomberg LP’s New York Finance Team, wrote the book “Comcasted,” taught writing at St. Joseph’s University, and studied economics and history at Penn. Reach Joe at 215-854-5194 and JoeD@phillynews.com
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