Business Blog: Hoover’s Business Insight Zone

The prevailing question from my CNBC session the other day was whether we’ll see a spate of private equity IPOs now that Blackstone Group has gone public. (For more on their early returns, check out IPO Central.) My hypothesis is that we won’t, because:

1. The market is in a particularly sweet spot right now — sweet enough for Steve Schwarzman & Co. to think that now is the right time to cash out part of their Blackstone stake.
2. The market could sour quickly, especially if the ominous rumblings in the bond market continue, or if the rivers of cash sloshing around today dry up, or if China monkeys with exchange rates, or if oil prices . . . maybe you get the idea. There are a lot of X-factors out there.
3. It’s hard to imagine that Henry Kravis or any of the other private equity titans will offer much in the way of bargain buys at the IPO store.
4. There are only a few real titans of private equity anyway, including KKR, Carlyle, and TPG. After you get out of that august company, you get into firms whose pockets and Wall Street connections are shallower, and who don’t enjoy nearly as much name-brand recognition.

The other commentator during our CNBC spot was investment guru Ken Fisher, who (a) agrees with me that Blackstone shares are too pricey to buy now, but (b) thinks that more private equity IPOs are likely since a deal could be much less lucrative than Blackstone’s and still be lucrative enough that a private equity firm would want to pursue it. We’ll see.

Meanwhile, my Hoover’s colleague Ryan Caione (who was invaluable in helping me to prepare for the CNBC spot) explores another angle of the private equity game in this Bizmology entry on the prospect of buyouts of financial services firms.