Sloan Sessions: Blackstone IPO

Lisa Napoli Mar 26, 2007
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Sloan Sessions: Blackstone IPO

Lisa Napoli Mar 26, 2007
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TEXT OF INTERVIEW

LISA NAPOLI: What do you do when your nice private investment company made about $10 billion last year because of all the smart decisions you made? Conventional wisdom says you don’t blow the whole thing and expose yourself by going public. Well clearly the private equity guys at Blackstone don’t buy into conventional wisdom. Late last week, they filed for an IPO, and the fine print shows just how smart the Blackstone guys really are. Allan Sloan is Newsweek’s Wall Street editor.

ALLAN SLOAN: Hi Lisa.

NAPOLI: So I don’t get it. Isn’t a private equity fund a bunch of rich guys investing on their own in private? Why would you want to go public?

SLOAN: Well if you read the document that the people at Blackstone have filed, you’ll see why they want to go public: Because they want your money.

NAPOLI: Well, OK, it seems like a bit mirrors in the funhouse thing. I mean why would I want to invest in a company that’s stock in trade is investing in other companies? I mean that’s a lot of risk even for a daring girl like me.

SLOAN: Now, Lisa you are so cynical, so negative.

NAPOLI: Yep.

SLOAN: Let me explain this. You’re not investing in the companies Blackstone buys, you’re investing in the part of Blackstone that gets the fees from the deals that Blackstone puts together. So they’re very honest. They tell you, a) you’re gonna own actually a limited partnership rather than stock, which becomes very complicated for tax reasons, b) you’re gonna need to file an extension with the IRS every year because we’ll never get you the forms in time, and c) you have no rights whatsoever because by agreeing to this you agree to waive all of your legal claims against us for anything we do. But other than that, you’re perfectly fine. So it would be great to have a piece of Blackstone. I’d love to have a piece of Blackstone. The question is, what it is worth? And I can’t possibly figure it out from these filings.

NAPOLI: Tell me why this guy is worth so much money and why everybody’s been talking about this deal. I mean this is a hot firm and they’ve made a lot of smart moves right?

SLOAN: Right. Blackstone has put together some of the most successful deals ever and they’ve made a ton of money for guys at Fortune, Dave Schwartzman the king of Wall Street, they’re very smart. They’re very, very good and this is your chance to buy in. The only question of course is, since these people have had impeccable timing, if they’re selling, does this really mean that you should buy?

NAPOLI: And that’s something that we can’t counsel people to do, we have to leave that to them.

SLOAN: Indeed, and besides, I don’t really know.

NAPOLI: Thank you so much, get out the crystal ball like we always say.

SLOAN: It’s been a pleasure.

NAPOLI: That’s Newsweek’s Allan Sloan. In Los Angeles, I’m Lisa Napoli, enjoy your day.

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