Blackstone shares surge on market debut

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Blackstone shares on Friday jumped 13 per cent on the US private equity group’s first day of trading in a strong performance that could encourage arch-rival Kohlberg Kravis Roberts to follow suit within weeks.

After pricing the offering at $31 for a unit in the partnership on Thursday night, Blackstone saw its price close at $35.06 – a 13.4 per cent rise. The listing raised $4.1bn and valued the company at about $38bn.

Blackstone’s sparkling debut on the New York Stock Exchange showed demand was strong in spite of doubts about the valuation and a political backlash against the industry.

KKR was closely watching the market reaction on Friday. Having considered a stock market launch for months and held advanced discussions with investment banks that would underwrite a listing, KKR could move within weeks towards a filing with US regulators, said people close to the matter.

No decision had been made and Blackstone’s market performance would have to be judged over a longer period, they warned. Other US private equity groups, including Apollo Management, Carlyle and TPG Capital, are also considering listings.

Steve Schwarzman, Blackstone’s chief executive, owns a 23 per cent stake in the company, worth about $10bn after the share price jump. He made $677m from the listing and Pete Peterson, senior chairman, received a pay-out of about $1.88bn.

Blackstone benefited from high demand for its units in spite of significant doubts about the company’s valuation.

In addition to concerns that the global private equity boom could be ending amid rising interest rates, a political challenge to the listing emerged last week when Max Baucus and Chuck Grassley, the most powerful members of the Senate finance committee, introduced legislation that would raise Blackstone’s tax bill in 2012.

Other politicians kept up the pressure, with Jim Webb, the Democratic senator from Virginia, questioning the security implications of Blackstone’s sale of a $3bn stake to the Chinese government.

House Democrats on Friday introduced legislation to increase the tax on profits from private equity deals.

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