Wednesday, March 21, 2007

The money heads for the doors

David Seaton's News Links
The New York Times has devoted a considerable part of its editorial page to a private equity company going public. It is very interesting and indeed troubling that the New York Times would devote an editorial to this subject. This quote is very important "if the stock market were a coal mine, Blackstone could be the canary."

As they say in the Big Apple, the New York Times is "not chopped chicken liver." The editorial itself will affect the market. It is one thing for me, modest blogger that I am, to engage in wild speculation and quite another for the New York Times. Something large and hairy is afoot. DS

Why Is Blackstone Going Public? - Editorial - News York Times Abstract: Less than three weeks after he said public markets are “overrated” and “really not worth it” to rainmakers like himself, Stephen Schwarzman, chief executive of the private equity powerhouse Blackstone Group, is reportedly working on a plan to sell a chunk of the firm to the public. The rarefied preserve of private equity — in which moguls use private money to buy shareholder-owned companies, take them private and sell them later — would be parceled out, share by humble share, to everyday investors.(...) Blackstone’s impending public offering might also offer a clue as to what could precipitate a downturn. By going public, the group is saying that it expects to need more money going forward than it is likely to be able to raise privately. That suggests that Blackstone is planning to do even bigger deals in the future — or that it foresees a credit crunch (or both). Lenders are already tightening at the bottom of the borrowing food chain, in dodgy mortgages. Easy money is also getting harder to come by as interest rates rise around the world. As pundits and policy makers debate whether credit woes will lead to weaker financial markets and a weaker economy, Blackstone may simply be trying to get ahead of its competitors, tapping funds where they’re still available. READ IT ALL

No comments: