This is bad news for KKR, Apollo, and all the other private-equity firms looking
to go public. Blackstone’s stock is now trading below $31, back where it started
– which means that people who got in at the IPO price are beginning to
lose money, and anybody who bought in the secondary market is seriously underwater.
the Counter said that "the $31 level is a line in the sand that this
suddenly jittery tape does not need to test," and although I’m generally
dismissive of lines, be they on charts or in the sand, I have a feeling he’s
Over the course of just two trading days, Blackstone has lost all of its froth.
Frankly, it was probably priced too high to begin with, considering the tax
bills in the Senate and the uncertain future for leveraged buy-outs more generally
in a world where interest rates are rising rather than falling. But that won’t
be any consolation to the underwriters working on KKR’s IPO. For even if KKR
tries to go public at a lower multiple than Blackstone (and remember, there
are egos at work here, and it’s far from certain that they would do that), the
financial price loves to concentrate on price movements much more than valuations.
And if people think that private-equity stocks only go down, there’ll be precious
little demand for KKR’s or anybody else’s.