NEW YORK – Blackstone Group shares rose 13 percent in their stock market debut Friday as investors scrambled for a piece of the sixth-richest initial public offering in U.S. history.
Chief Executive Stephen Schwarzman now controls a firm whose market value stands at about $40 billion. His personal wealth also skyrocketed, with a 24 percent stake in Blackstone's management partnership worth around $8 billion, on top of the roughly $449 million he was expected to cash out in the IPO.
For those lucky enough to get in on the IPO — a difficult task since most shares were snapped up by big financial institutions and money managers — the stock barreled past its $31 initial price. The shares closed up $4.06, or 13.1 percent, to $35.06. About 113.1 million shares traded hands — almost the full offering of 133.3 million shares.
Exuberance about the booming private-equity industry overshadowed mounting criticism of the lavish lifestyles of top executives from politicians, labor unions and the media. The strength of Blackstone's debut marks a coming of age for the once-secretive industry, as it joins Wall Street's publicly traded top-tier investment houses.
"This is a new breed of publicly traded financial firm," said Matthew Rhodes-Kropf, a professor of finance at Columbia Business School. "Once the market demonstrates its appetite for this type of investment, we're going to see all the biggest and the best go public — even after the incredibly negative press it has generated."