Mumbai: US antitrust authorities have approved
plans by Blackstone Group LP to buy Alliance Data Systems
Corp.for $6.76 billion even as the equity firm is planning
to go public with an IPO listing on the bourses.
Officials have completed their investigation of the deal
without taking action, the US federal trade commission
said in a notice.
Dallas-based Alliance Data is a business services company
providing transaction, credit and marketing services,
an industry that has attracted heavy interest from private
equity buyers lately.
The Blackstone Group has, meanwhile, announced the appointment
of Joan Solotar as senior managing director public
markets. Solotar will join Blackstone from Bank of America
Securities where she has been a managing director and
director of equity research.
Solotar will be responsible for managing Blackstone''s
relationships with its public investors, industry analysts
and the general investment community. She will also guide
the firm on analysing strategic development opportunities
and will advise Blackstone fund portfolio companies on
their positioning in the public equity markets. Relations
with investors in Blackstone''s investment funds will continue
to be managed by Blackstone ''s senior managing director,
Kenneth C. Whitney.
According to the plan, one of the two founders of Blackstone
Group, Stephen A. Schwarzman, 60, will cash out a maximum
of $677.2 million from the offering, and his remaining
24 per cent stake in Blackstone will be worth $7.7 billion
if the shares are offered at $30, the midpoint of the
range of $29 to $31 the company has cited (if they trade
up, he and others will be worth even more).
Peter G. Peterson, 81, the other partner, will put his
$1.9 billion payoff into a charitable trust, but will
still control 4 per cent of the company, worth about $1.3
Schwarzman earned $398.3 million last year while Peterson
earned $212.9 million.
The twop had started the Blackstone Group with $400,000
in 1985. On June 11, the firm updated its prospectus and
included the information everyone on Wall Street has been
waiting for: how much money the principals will make in
Blackstone plans to sell 133.3 million shares in the offering,
which could come late next week. At the midpoint, the
firm would raise $3.8 billion after underwriting costs.
Underwriters are expected to sell the overallotment of
20 million shares because of the high demand. In addition,
the Chinese State Investment Company will pay $3 billion
for a nonvoting stake.
Other executives listed in the filing include Hamilton
E. James, the firm''s president, who will get a maximum
of $188.5 million and own 4.9 per cent; J. Tomilson Hill,
who runs the hedge fund business and who will make $22.1
million and own 1.6 per cent; and Michael A. Puglisi,
the chief financial officer, who will make $13.4 million
and own 0.7 per cent. James made $97.3 million last year,
Hill $22.1 million and Puglisi $17.4 million.
The Blackstone Group is a leading global alternative asset
manager and provider of financial advisory services. The
Blackstone Group is one of the largest independent alternative
asset managers in the world. Its alternative asset management
businesses include the management of corporate private
equity funds, real estate opportunity funds, funds of
hedge funds, mezzanine funds, senior debt funds, proprietary
hedge funds and closed-end mutual funds. The Blackstone
Group also provides various financial advisory services,
including mergers and acquisitions advisory, restructuring
and reorganization advisory and fund placement services.
According to the filing, the Blackstone Group, which has
770 employees and manages $88.4 billion in private equity
funds and hedge funds, will have a market capitalisation
of about $32.4 billion. In contrast, the investment bank
Lehman Brothers , which has more than 27,000 employees
and a far more diversified business, is worth about $40
billion (Lehman is one of the underwriters).
Blackstone''s planned initial offering is seeking to capitalize
on a tidal wave of demand from pension funds, foundations
and endowments and wealthy individuals who are looking
for alternative assets, specifically private equity, hedge
funds and real estate funds.
Blackstone announced that it was going public in March
and is one of the biggest players in private equity, along
with Kohlberg Kravis Roberts and, which all raised $20
billion funds recently.
decision to go public follows that of the Fortress Investment
Group, a diversified alternative asset manager that went
public in February at $18.50. The stock closed at $31
on its first day of trading and generated widespread interest
among hedge fund and private equity firms contemplating
a similar move. It closed at $25.73 on June11.