Carlyle MD: The Blackstone IPO was “Highly Successful”

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.

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