With Blackstone stock languishing below its offering price, few people would
count the private equity firm’s IPO as a smashing success. But among
them, it would seem, is Carlyle Group managing director Jason Lee:
"The Blackstone IPO was highly successful. We are certainly evaluating
that option as well," said Jason Lee, Carlyle’s managing director and
head of the group’s real-estate division in Asia…
"Clearly we have to consider [an IPO] in order to be competitive,"
Mr. Lee said. "Our peers are obviously going to be accessing a huge amount
of capital in the public market."
On the face of it, this makes little sense. A quick glance at Blackstone’s
share price is enough to show that the IPO was not "highly successful"
in any normal sense of the term, unless a highly successful IPO is one where
the firm’s founders make billions while public investors lose money.
And the idea that private-equity firms need to raise equity capital "in
order to be competitive" is also a bit weird. The vast majority of the
proceeds from Blackstone’s IPO are going not into the company, where they can
be used for future deals, but rather straight into the pockets of the firm’s
principals. The amount of permanent equity capital that Blackstone is raising
for its own corporate use is tiny, compared to the magnitude of the funds it
So what on earth is Mr Lee talking about? Given that the simplest and most
obvious answer is often the right one, I’m going to go with the theory that
he wants to become a bona fide squillionaire himself, just like Pete
Peterson and Steve Schwarzman. And right now, the
easiest way to do that is to sell his company’s future profits at a vast multiple
to the investing public.