Going public and misalignment of interests

During The Blackstone Group’s second quarter earnings call in July, firm president Tony James explained that being a public company does not present any ‘misalignment of interests’ for the firm’s limited partners.

“If you think it’s in your interest to gather assets, you do. We’ve never been focused on gathering assets, everything we do is based on investment performance for LPs,” The Blackstone Group president Tony James said during the listed firm's second quarter earnings call.

“That is the franchise; the only reason you exist is to deliver the returns. None of our vehicles are permanent, if we don’t deliver to LPs, there’s no Blackstone. We don’t see any misalignment, our focus is on delivering great returns year in and year out,” he said.

Blackstone went public in 2007, leading the pack — along with Fortress Investment Group — of large private equity firms to sell shares of their management companies to public shareholders. Blackstone was followed by Kohlberg Kravis Roberts and Apollo Global Management. Reportedly, The Carlyle Group has been preparing a public filing.

“A lot of the biggest firms will end up being public,” James said. “The reason we went public, like many companies, was to provide us with access to capital and markets to fuel our growth. The biggest firms will all look at that and will basically feel at a competitive disadvantage without access to those resources.”