Business Insight Zone

The frenzy was huge. The talk was ubiquitious. The aftermath . . . was ugly.

Six weeks into its life as a publicly traded company, Blackstone Group is trading more than 20% below its IPO price of $31 per share. Congress may take a swipe at its future earnings by changing its effective tax rates. Chinese bloggers are angry about all the money the Chinese government plowed into the company when it went public. The financial world wonders if this means that private equity is on the downslope. (The answer to that question doesn’t get any rosier when we consider how much tougher it’s gotten in the past six weeks to borrow money.)

I’m hesitant to say “I told you so,” because I don’t think my analysis at the time was all that original. But what I said then, from this interim milestone of six weeks out, looks correct so far: if Steve Schwarzman figured that the time was right for Blackstone to sell a chunk of itself on the public markets, that in itself was a signal that the market was around its peak — at least, assuming that Schwarzman’s usually world-class ability to assign value to assets was accurate in this case. It would surprise me if he were very wrong about the valuation of his own company, which is why it doesn’t surprise me to find that he successfully floated it at a peak in value that could be a long time in coming again.

Category: Finance & Real Estate, IPOs