Blackstone crosses $200bn
It’s been a rough two year slog for bankers taking companies public. Volatile markets, cratering valuations and high interest rates caused many private companies to delay their IPO plans.
But rejoice! Blackstone, the bellwether of the private equity industry, says business is about to come back in a big way.
The owner of Medline Industries, software group UKG and the world’s largest portfolio of data centres says it is preparing to take some of its largest investments public.
Blackstone president Jonathan Gray has told the FT a stock market rally has given the $1.1tn-in-assets group confidence that public markets can handle some of its biggest bets.
“When you have this strong of an equity market it’s almost like a magnet pulling companies out of the private market,” said Gray, who added that discussions inside 345 Park Avenue had “gone from theoretical to practical and we are talking about things like timing”.
Gray’s optimism on IPO markets provided a positive gloss to its muted asset sales in third-quarter results released on Thursday.
The biggest story at Blackstone is its continued growth in almost any market environment.
Blackstone attracted $41bn in new assets in the quarter, with half coming in its credit and insurance business. The unit now manages more than $350bn, making it Blackstone’s single largest business line by assets.
“We are building a third-party performing credit juggernaut, and we expect our business to grow significantly from here,” Gray told analysts on a call.
Chief executive Stephen Schwarzman has earmarked credit investments as where Blackstone will uncover its next $1tn. Rivals at Apollo, KKR and Brookfield are chasing the same dollars.
They have all identified the problem. As their buyout funds have grown beyond $20bn in size and deals have grown larger, the exit options have narrowed. It’s harder to sell a company worth 11 figures than one worth half as much.
In turn, they have become far more reliant on the IPO market, which as Gray has said himself, is “cyclical”.
That’s not the case in credit investments, where banks have retreated and opportunity abounds. Blackstone and its rivals have been buying loan books and using their insurance investment mandates to offer financing.
The market sent Blackstone shares to a new record high on Thursday, pushing the firm’s valuation above $200bn for the first time.
Canadians push for a $47bn deal in Tokyo
Alimentation Couche-Tard made a full-court press in Tokyo on Thursday, where the CEO, CFO and billionaire founder Alain Bouchard all lined up to say they were ready to engage with Seven & i over their proposed $47bn takeover.
The message from the massed ranks of executives was clear: Seven & i’s break-up plan, announced last week, should be ignored and investors should back its bid.
“We think [our offer is] more compelling than what was proposed last week, with a great deal more certainty and much less risk,” said Alex Miller, the recently appointed chief executive and president of Couche-Tard.
The problem for Couche-Tard is that, despite flying all this way, Seven & i, which owns the well-loved Japanese convenience chain 7-Eleven, didn’t agree to a meeting.
The offer from the owner of Circle K is being evaluated by the Japanese group’s special committee and the Canadian delegation will have to wait, along with the market, for its decision.
One thing that’s working in Couche-Tard’s favour: the company is offering cold hard cash.
While Seven & i’s stock price has risen more than 30 per cent since the first offer in August, it still trades at ¥2,218 ($15) a share, which is below the latest bid of closer to $18.
“Our offer is a certainty, right, it’s cash, versus a hope that [Seven & i] can continue to execute on a plan that’s not delivered value over the last years,” added Brian Hannasch, Couche-Tard’s former chief executive and now special adviser to the group.
Couche-Tard’s top team has made one thing exceptionally clear: they’re not willing to give up easily.