bloggingbuyouts

That loud cracking sound you hear is the sound of The Blackstone's Group's (NYSE: BX) Steve Schwarzman's wallet opening to the tune of a $100 million donation to the New York Public Library, according to The New York Times.

That's what it takes, apparently, to rename the main Fifth Avenue landmark building, which will be called the Stephen A. Schwartzman Building when its renovation is completed in 2014. That's pending approval of the landmark commission and the ability to withstand the roar of the chattering classes, which the Times politely referred to as the inevitable "spirited commentary."

Schwarzman has come under scrutiny because though his high-spending habits have been commensurate with the the size of his personal fortune, his charitable giving has not. While he has given more than most people could ever dream of, as chronicled in James Stewart's article in The New Yorker, this major donation to the New York Public Library is his biggest yet.

Stewart notes that Schwarzman's alma mater, Yale, balked at renaming a dining hall after him for an oddly-structured $17 million donation, and the offer was withdrawn. So for any Yalies out there with only $20 million or so to give, that naming opportunity remains -- it will take five times as much to get your name etched at 42nd and Fifth.

Stephen Schwarzman managed to make the Fortune "Man of the Moment " feature and end up on the Time 100. Last year he threw himself a famously excessive birthday bash as he turned 60 on Valentine's Day.

What a difference a year makes. Over the twelve months since his little party, Schwarzman has been the target of vicious attacks in the press. He recently told The New Yorker, "How does it feel? Unattractive. No thinking person wants to be reduced to a caricature."

But, Schwarzman has not been reduced. He has been "super-sized" in the way that people who brag about how much dough they have almost always are. The very wealthy in the US rarely talk about being filthy rich. They simply give their money away a la Bill Gates or Warren Buffett. No one knows the names of the great majority of people on the Forbes 400.

Schwarzman will have a more modest birthday party this year, according to press accounts. He may be saving money to give back to shareholders who invested in Blackstone (NYSE:BX) last year. The shares hit $38 after the IPO and now trade at under $18. About $4.5 billion in shareholder value has gone down the drain. He has also been a bit hard on shareholders at other companies. Blackstone backed out of a deal to buy Alliance Data (NYSE:ADS). Those shares moved from $81 to under $56. That's another $3 billion in shareholder money gone.

Instead of whining to the press about being stomped on by people who have lost money investing in Blackstone or Blackstone-related deals, perhaps he should get a wig and sunglasses so that he can walk around unnoticed, like Greta Garbo did.

Douglas A. McIntyre is an editor at 247wallst.com.

Recent private equity IPO Blackstone (NYSE: BX) cannot get its shares to move up for love or money. That may be because the company is not as well run as people may think.

It now appears that Blackstone's investment in Financial Guaranty Insurance Corp. is in trouble. According to The Wall Street Journal, "Like other bond insurers that guarantee interest and payment in the event of default, FGIC is under scrutiny by credit-ratings firms over whether it has enough capital." In other words, the company needs more money. Blackstone may have to put up $200 million in an aid package.

Over the last six months, Blackstone's shares are down over 40%. Part of that is because of investments like FGIC, and part is because the private equity business is slowing due to tight credit markets and the inability to take some of its investments public to provide liquidity.

What this boils down to is that Blackstone was really nothing special. Its IPO appeal was not based on management; it was based on an overheated private equity market. Now its management seems ordinary and its industry seems troubled.

Blackstone was never a good investment, and that becomes more apparent with each passing day.

Douglas A. McIntyre is an editor at 247wallst.com.

On its prior conference call, The Blackstone Group LP (NYSE: BX) said it is planning to scoop up distressed buyout bonds. With its cash hoard, it seems like a good bet. Besides, there are signs that the debt markets are picking up, especially in light of the financing of the First Data deal.

According to news reports, some other firms now are seeing dollar signs from the same strategy. Take Onex Corp., a top private equity firm in Canada, which is investigating distressed debt. But there's a hitch: Onex does not have the right staff to pull it off. Just like many other private equity firms, Onex focused on putting deals together. Onex said it is talking to a two-person group to help out.

Basically, this is yet another indication of why big firms, like KKR, TPG, and Blackstone, have big advantages. With their scale and resources, they certainly are nicely positioned when markets experience sudden changes.

But the distressed debt opportunity might be big enough for many firms to profit from. After all, as Onex's CEO, Gerald Schwartz, said: "there are opportunities that are just staggering."

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

"The Fed's moves do not mean we are out of the woods as far as further market corrections go; however, we do want to increase our exposure to the market, particularly top quality financial stocks," says Daniel Frishberg.

The host of BizRadio 1320 and editor of The MoneyMan Report is adding two stocks to his portfolio that he considers among the "best companies in the world" – the Blackstone Group (NYSE: BX) and Citigroup (NYSE: C).

He explains, "The market's action has been very impressive. Our Market-Ray indicator shows that demand was overwhelmingly positive and while supply dried up. That is a great recipe for higher prices."

He continues, "One thing that we believe is clear is that the Fed is more interested in global growth and the impact on Americans than the risk of inflation at this time. This will put a floor on certain asset groups such as financials."

One favorite financial holding, already in the advisor's portfolio, is Goldman Sachs (NYSE: GS). Now, to boost his exposure to the financial sector, Frishberg says, "We're adding two dominant stocks at cheap levels, Citigroup and Blackstone."

Hamilton James, who is Blackstone's (NYSE: BX) chief operating officer, is a seasoned veteran of the private equity world. He joined DLJ in 1975 and created the firm's merchant banking division in 1985. When DLJ sold out to Credit Suisse (NYSE: CS), he spent a couple year's as a high level executive there.

So, no doubt, his musings hold a lot of weight. In fact, he recently spoke at the Dow Jones' Private Equity Analyst conference.

His view? Well, things aren't so bad in the private equity world. Interestingly enough, he thinks Wall Street will be able to clear the $300+ billion in buyout loans fairly quickly.

True, the buyout volume will not be to the extent that we've seen over the past couple years. But, we should still see a good amount of activity. What's more, well-capitalized firms like Blackstone should have an advantage – and snag companies at good valuations.

And, of course, there's still lots of opportunity in emerging markets, such as China. After all, the Chinese government is a big-time investor in Blackstone and is probably motivated to get some deal flow for its partner.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

Reports started circulating yesterday that PHH Corporation (NYSE: PHH), an outsource provider of mortgage and fleet management services, which is in the process of being acquired by General Electric Company (NYSE: GE) and The Blackstone Group ((NYSE:BX), is having trouble getting financing as the banks are balking. This is somewhat comical, since both GE and Blackstone have the resources to close this $1.8 billion deal if they really wanted to.

As a reminder, GE Capital, the division acquiring PHH, was one of the great growth stories of the 1980s and early 1990s as Gary Wendt, a Welch lieutenant, built the company up by buying assets that were often left for dead by investors. However, today, GE's finance division is going after businesses that are peaking, not bottoming out.

Another point worth mentioning is how difficult it is for GE to do deals that can have an impact on its performance. With a market capitalization of $411 billion, doing deals $1.8 billion in size is going to have little impact on the colossal company. Although a great company, GE is not a great stock. The PHH transaction shows how difficult it is for this huge company to grow by acquisition and the silliness of it saying it cannot close the transaction because of bank financing.

KKR and Blackstone can't get a financing break, for all their cash. According to the Financial Times, Cadbury Schweppes (NYSE:CSG) has turned down another private equity offer for its drinks division.

The consortium included not just KKR and Blackstone, but Lion Capital as well. The board reportedly rejected the deal due to unfavorable financing conditions.

You can't say the big boys aren't out there trying!

It's been a lonely place at BloggingBuyouts lately. There's been a few deals – but no mega deals. And, of course, there's lots of buzz about troubled deals, such as Home Depot's (NYSE: HD) attempted sale of its wholesale business.

Unfortunately, according to a recent piece in Reuters, it looks like the loneliness will continue for the rest of the year -- if not through a good part of 2008.

Basically, there is about $330 billion in debt to get placed – which is not easy when the financial system is in the midst of a credit crunch. In fact, on conference calls from firms like Blackstone (NYSE: BX) and Fortress (NYSE: FIG), the message is that dealmaking is in the freezer.

If anything, private equity firms are probably going to do smaller deals – or buy up discounted debt or other securities.

Of course, this is very bad news for the investment banks, which have been addicted to fees generated from LBO deals.

Although, I think these firms will try focus on other things, such as IPOs (which have lucrative fees) and also try to drum up M&A deals among strategic parties. But, there are limits here too.

In other words, I think Wall Street is going to be down-and-out for awhile.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

On its recent conference call, private equity powerhouse, Blackstone Group (NYSE: BX), indicated that there are some great opportunities in global markets, such as China and India. Indeed, with tons of cash, the firm is nicely positioned to capitalize on things.

Well, today Blackstone announced that it has made an offer for 50.1% of Bangalore, India-based Gokaldas Exports. The stake could go as high as 70.1%. The deal amounts to about $165 million.

Gokaldas Exports is India's largest apparel exporter. There are roughly 47,000 employees and customers include biggies like GAP (NYSE: GPS), Nike (NYSE: NKE), and Abercrombie and Fitch (NYSE: ANF). Gokaldas manufactures about 2.5 million garments every month.

Interestingly enough, this deal is not meant for a quick flip. Basically, it's an investment to help propel Gokaldas Exports, which seems poised for continued growth in the Asia.

Of course, it looks like we'll be seeing some more Indian deals (as well as from China).

And, if you want to check out other M&A deals, click here.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Nothing like seeing billionaires have a hard time. But that's the case with big-time private equity kingpins, like KKR's Henry Kravis.

Despite being the pioneer of the industry, KKR was a bit late to the IPO feeding frenzy, with arch enemy Blackstone (NYSE: BX) snagging the riches.

Interestingly enough, KKR had to report some of the misery in an updated IPO filing (which is the first amended document).

If you look at page 30, you'll find the following:

"For example, the cost of financing leveraged buyout transactions by issuing high-yield debt securities in the public capital markets has recently increased significantly. If conditions in the debt markets do not become more favorable to us in the near term, we may need to rely on financing commitments provided directly by investment banks or other sources in order to consummate pending transactions or finance future transactions. Such financing may be significantly more costly, with terms that may be significantly more restrictive, than financing that was, until recently, available to us in the public capital markets. More costly and restrictive financing may adversely impact the returns of our leveraged buyout transactions and, therefore, adversely affect our results of operations and financial condition. In addition, in the event of a prolonged market downturn, our business could be affected in different ways. Our profitability may also be adversely affected by our fixed costs and the possibility that we would be unable to scale back other costs within a time frame sufficient to match any decreases in net income relating to changes in market and economic conditions."

Yes, it's a bummer for an upcoming IPO. Just look at the horrendous after-market performance of Blackstone. In fact, despite a strong quarterly report, the stock had a tepid performance today.

And, if KKR does have troubles financing mega deals like TXU (NYSE: TXU) and First Data Corp (NYSE: FDC), we might see the next filing for withdrawal of the public offering.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

As I posted in June, Blackstone Group's CEO Stephen Schwarzman gave an interview to the Wall Street Journal with a compelling theme -- Schwarzman is the Napoleon of private equity. Napoleon-watch tracks his moves on the business battleground.

The New York Times [registration required] reports that China is not happy its investment in Blackstone (NYSE: BX). Since Blackstone's June 22 IPO, China's $3 billion stake has lost $425 million worth of its value, or 14%.

We may look back on China's investment in Blackstone as a watershed event. Back in the 1980s many Americans were up in arms about the 1989 purchase of Rockefeller Center by a Japanese company -- Mitsubishi Estates Co. That money-losing investment marked the turning point in a decades-long decline in Japan's global ascendancy. While China's Blackstone investment did not cause much uproar here, it may have marked the private equity peak just as the Mitsubishi investment marked a peak in both Japan and New York real estate.

Ok, if you bought shares of The Blackstone Group LP (NYSE: BX) for $38, you probably don't like the firm's leader, Stephen Schwarzman. Or, if you pay ordinary tax rates, you probably have some distaste. Oh, what if you got a pink slip from a company that Blackstone purchased?

I think it's a good bet that Schwarzman's popularity rating is dicey.

Yet, in the deal world, he should be in the Hall of Fame. In fact, in this Sunday's NY Times, Andrew Ross Sorkin has a piece that defends the controversial financier.

According to Sorkin, he thinks it was inevitable that we would learn about the shadowy world of private equity. So why not now?

What's more, Sorkin says that Schwarzman is not the only dealmaker who likes to spend money on luxury and parties. For example, he points to TPG's David Bonderman, who hired the the Rolling Stones for his birthday bash.

Of course, Schwarzman was smart enough to realize that there was a big opportunity to take lots of money off the table – and, as a result, make it more difficult for his competitors to do the same.

More importantly, Schwarzman has assembled a top-notch team and racked up stellar returns.

Basically, he is no different from any other top financier, which is probably why he has lots and lots of detractors.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.