| Schwarzman: Stake surge
New York, June 22 (Reuters): Units of giant private equity firm Blackstone Group LP surged more than 20 per cent in their stocks market debut Friday, a day after pricing at the top of the initial public offering's forecast range.
Common units of the highly anticipated issue shot as high as $37.49 in early trade on the New York Stock Exchange, a 21 per cent premium to the IPO price of $31 per unit.
The $4.13billion offering, closely watched by Wall Street to Washington, was the largest US IPO in five years and the sixth-biggest ever. People familiar with the offering said Blackstone shares were about seven times oversubscribed, indicating strong demand.
The IPO broke new ground for an industry that has become a driving force in global finance by pursuing ever-larger takeovers and raising record amounts of capital.
But some analysts said the Blackstone debut, at a time when US lawmakers are calling for higher taxes on private equity profits, revealed an element of caution among investors.
In February, when Fortress Investment Group LLC became the first US private equity and hedge fund to go public, its shares jumped more than 80 per cent and ended their first day of trading up 68 per cent.
Since then, Fortress shares have fallen 17 per cent.
“A lot of errors were made with Fortress opening so strong. It was unable to sustain those high altitudes," said David Menlow, IPO analyst at IPOfinancial.com. "The real issue here is that lessons were clearly learned. I'm thrilled that the (Blackstone) opening proceeded as it did.”
That said, the Blackstone offering minted billions in new wealth for its founders and top executives and has inspired rival buyout firms to pursue their own IPOs. Blackstone chief executive and co-founder Stephen Schwarzman saw his stake in the company surge by $1.6 billion, to $9.4 billion.