Schwarzman Says Worst Is Behind Private-Equity Industry as Sales Stabilize

Just had dinner with a friend of mine who closed a 100m fund. The worst may indeed be over.
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Schwarzman Says Worst Is Behind the Buyout Industry

Oct. 14 (Bloomberg) -- Blackstone Group LP Chief Executive Officer Stephen Schwarzman said the worst is behind the private equity industry, as sales at companies it owns stabilize and the firm weighs selling shares through public offerings.

"After virtually no realizations over the last year, we're seeing the beginnings of realizations through sales and equity offerings," Schwarzman told a private equity conference in Dubai today. "Revenues of most portfolio companies are no longer declining."

Blackstone, the world's largest private-equity firm, is seeking to lead a resurgence in leveraged buyouts after a two- year drought triggered by the global credit crisis. Blackstone last week announced the biggest private-equity deal of the year, the $2.7 billion acquisition of Anheuser-Busch InBev NV's amusement park business.

"The future now looks substantially brighter for us in the private equity business," he told attendees at the Super Return Middle East conference.

Blackstone is planning to list as many as eight companies and sell five more to take advantage of rising stock markets and return money to investors, Schwarzman said. The sale of the five companies will return an estimated $2.8 billion to investors, Schwarzman said.

"We're in a radically different place than a year ago," he said after the speech, adding that the recovery wasn't complete. "It'll take several more years before we have what most people regard as a normal situation."

'Eye of the Storm'

Guy Hands, founder of London-based private equity firm Terra Firma Capital Partners Ltd., said in separate remarks that any optimism around a recovery may be misplaced.

"My guess is that in the West we are currently in the eye of the storm, and the calm we feel will eventually give way to more panic," Hands said in a speech at the conference. "We are, I believe, at the beginning of a fundamental global political and economic shift in power not seen since the 1800s."

Schwarzman, 62, created Blackstone in 1985 with Peter G. Peterson. The firm, which also invests in real estate and credit and manages funds of hedge funds, has $93.5 billion in assets under management.

Blackstone is weighing opening an office in the Middle East, Schwarzman told reporters after the speech. He declined to be more specific about timing or location. His firm would join competitors including Carlyle Group and KKR & Co. who have set up bases in the region.

To contact the reporter on this story: Jason Kelly in New York at jkelly14@bloomberg.net

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