Schwarzman: “KKR destroyed the market for anyone else”(2)

Blackstone chief executive Stephen Schwarzman has argued that public markets are not a viable source of capital for buyout firms, suggesting that Kohlberg Kravis Roberts’s $5 billion listed vehicle soaked up all the available liquidity.

Stephen Schwarzman, chief executive of the Blackstone Group, has cast doubt on the viability of public markets as a fundraising option for private equity, despite the success of rival firms Kohlberg Kravis Roberts and Fortress Investments in raising money through a public offering.

Schwarzman suggested the public markets were “over-rated” as a fundraising tool, and said it was questionable “that $5 billion looms large”, according to Reuters. He was speaking on a panel at the Super Return conference in Frankfurt.

Also on the panel was Todd Fisher of Kohlberg Kravis Roberts, whose firm raised $5 billion – $3.5 billion more than planned – by floating a listed vehicle on the Euronext stock exchange in Amsterdam.

Schwarzman suggested KKR had deliberately spoiled the chances of anyone else raising money using this method. He said: “KKR destroyed the market for anyone else… which I think was their objective.”

He argued that Apollo Management’s listed vehicle, which raised $1 billion less than the expected $2.5 billion, proved this point. “To divert yourself like that and then take on that cost, is really not worth it,” Schwarzman said.

His comments come soon after US-based group Fortress Investments listed 10 percent of its management company on the New York Stock Exchange, and saw the value of its shares almost double on their first day of trading.