bloggingbuyouts

Okay. Everyone likes to get rich. And no one likes to get richer faster than Wall Street guys who are already loaded. But once we get past THAT most obvious explanation for The Blackstone Group's filing to raise $4 billion in an initial public offering, how do they REALLY justify it?

After all, the current environment in the private equity markets is probably the easiest in history for raising funds from investors. It's so darn easy that many observers think we're in the midst of a private equity bubble. Private equity firms collect billions in assets and launch new funds with boasts that they are oversubscribed on a weekly basis. Blackstone now has $79 billion under management, up from $14 billion at the end of 2001. That's 40% growth.

So why go through all the trouble and expense of an IPO to raise a paltry $4 billion more? Blackstone execs could probably raise that in five minutes with three phone calls. CEO Stephen Schwarzman himself called the public markets overrated at a European conference less than a month ago.

Well, a look at the S-1 shows that Blackstone's founders are simply planning for the future -- a time when institutional investors might not be so eager to throw money at them. "Our corporate private equity and real estate businesses have benefited from high levels of activity in the last few years," reads one of the first lines in the 220-page document. "These activity levels may continue, but could decline at any time because of factors we cannot control."

The rumors were true! Today at the market's close, Blackstone Group LP filed with the SEC to raise up to $4 billion in an IPO. The S-1 is huge and full of all kinds of little juicy details that I'm sure we'll be analyzing in depth over the coming weeks. I can't wait to read the clause entitled "Firm Use of Our Founders' Private Aircraft."

However, until further examination, we can't answer the most important question asked earlier today: how much does founder, chairman and CEO Stephen Schwarzman make? He and other important officers actually don't draw salaries or bonuses and are instead paid out cash distributions of the firm's investment gains each year. How much were they paid for 2006? That part is blank, in all likelihood because it hasn't yet been paid out for the year (although I'd be willing to lay odds the management team knows how much they made in 2006). Crafty! [Update: Deal Journal's Dana Cimilucca was sharper-eyed than I and found one nugget: following the offering, Schwarzman will draw a modest, Warren-Buffett-sized salary of $350,000. Our original question -- what does Schwarzman make today? -- is still unanswered.]

The huge potential amount of the IPO will certainly make for interesting philosophical discussions over the next few months. Oh, and we have one more question to answer: which banks lead the deal? Morgan Stanley and Citigroup are the guys with top billing; Merrill Lynch & Co, Credit Suisse, Lehman Brothers and Deustche Bank Securities round out the group making millions in fees on Blackstone's coming march to the public markets.