blackstone at Brave New Films

Pete Peterson on the Economic Crisis He Helped Create

2008-06-23T14:33:19Z

Pete Peterson, co-founder and senior chairman of The Blackstone Group, will give $1 billion to his new foundation, the Peter G. Peterson Foundation, to help solve some of the country's biggest economic problems. In my recent conversation with him, we also talked about how he sees the current economic crisis, sovereign wealth funds, and his relationship with Blackstone co-founder and CEO, Steve Schwarzman. Visit charlierose.com to see the full interview.

[And for more information about buyout industry executives, see our War on Greed.]

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Blackstone, the New Enron

2008-06-11T15:35:02Z

David Morris has an excellent piece over at AlterNet about how the New York Public Library will rename its main branch the Stephen A. Schwarzman Library in return for his contribution of $100 million. Schwarzman, as Morris points out, is the co-founder and chairman of the board of the Blackstone Group, which "is to the first years of the 21st century what Enron was to the last years of the 20th century."

Blackstone really has it all: a co-founder who makes hundreds of millions a year; the ability to outspend all other private equity firms combined in lobbying Congress to keep tax loopholes alive; and investors who have lost about 60 percent of their money since the company's initial public offering last year, while Schwarzman got billions from his share of the sale.

Nice to know Blackstone is giving something back to the public that they've bilked, and being rewarded for it too!

For more info, check out our ongoing War on Greed.

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The Greatest Greed

2008-03-08T01:14:09Z

As a former partner in a private equity firm, I have seen greed at all levels.

In my opinion, there is no greater exemplification of private equity greed than the taking public of a portion of the management companies of private equity firms. Blackstone and Fortress were two that pulled it off. KKR filed documents to go public and several others, including The Carlyle Group, were rumored to do IPOs; however, market conditions kept the latter few from swindling the public markets to line their pockets. The moves by Blackstone and Fortress proved prescient: They made out like bandits.

Blackstone went public at $31 a share on June 22, 2007. This netted the firm’s partners $3.7 billion. The two founders had the best paydays. Steve Schwarzman had a nearly $450 million payday with a residual 24% ownership in the company valued at $7.5 billion. According to public filings, Schwarzman received cash payouts of $400 million the year prior. His co-founder partner, Peter Peterson, cashed out $1.9 billion and retained a 4% stake in the company.

Fortress came out in February 2007. Their five founders had a payday of $409 million. This was after taking combined distributions of $447 million the year prior.

Both companies had a short spike in stock price post-close and have since been trading below its IPO price. Did most institutions cash out at the spike leaving the crumbs for the average investor that has lost money?

Articles on Steve Schwarzman estimated his net worth at $10 billion before the IPO. The IPO nearly doubled his net worth.

Stay tuned – how the Blackstone partners cashed out $3.7 billion in its IPO and avoided paying taxes on it.

Congress Considers Taxing Private Equity Firms - CNBC

2008-06-08T03:31:14Z

Center for American Progress Senior Fellow Christian Weller joined CNBC to debate the merits of current legislation aimed at levying taxes on private equity firms, which currently are able to exploit a lucrative loopholes in the tax code.

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