Tuesday, November 27, 2007

Blackstone unturned - Or, "another blog frankly devoid of factual support"

Stephen Schwarzman, the chairman, chief executive and co-founder of the Blackstone group went on the offensive in defense of those holders of the moral high ground, the denizens of Private Equity. The criticism of PrivIty, he said, was "unremittingly hostile and frankly devoid of factual support".

Guambat read his arguments and swayed. Guambat is now convinced that it is the fault of all that complacent, lazy, unfocused, underpaid and short-sighted executive management and directors of all those big public companies that makes PrivIty do it. And its all for the good of the workers and the world that PrivIty is so insistent on its job. See, Blackstone chief calls private equity 'a force for good'.


Guambat is sure that it is just that sort of spirit that convinced the denizens of Communist Capital to take a piece of the stone. "The Chinese Government today agreed to buy a $3 billion (£1.5 billion) stake in the US private equity firm Blackstone and could hand it part of a $200 billion fund which China has earmarked for overseas investments."

"Last month, Industrial and Commercial Bank of China Ltd (ICBC) took a 20 per cent stake in South African lender Standard Bank. ICBC is now the world's biggest bank with a market capitalisation of $360 billion...."

"The CIC [China Investment Corporate Ltd] was launched in September to mitigate the risks in China's huge foreign exchange reserve." That risk is, of course, primarily that China owns too many US dollars and not enough hard/strategic assets.

That article above discloses that the chairman, chief executive and co-founder of the Blackstone group, Schwarzman, reckons that the Chinese have just the most dandy government in the whole wide world, and Guambat has no reason to doubt he's seen most of them up close and personal. The article said,
Stephen Schwarzman, chairman, chief executive and co-founder of Blackstone, said the deal took just three weeks to be agreed from the time China decided to invest.

“I doubt that there is any government in the world that could have done it more efficiently or more professionally.”

Guambat reckons, though, that his offensive defense of the PrivIty was way shy of the example set by Fortune magazine, which complains that "few observers appreciate that the private-equity phenomenon is about more than just big bucks."

Well, permabear Jeremy Grantham is one who will not leave that Blackstone unturned. He reckons the worm will turn for it.

His two pieces, "The Blackstone Peak and the Turning of the Worms", and "Evaluating the Usefulness of Private Equity Managers" found here provide at least some factual support for PrivIty criticism.

And that little Hertz affair with PrivIty adds a bit more.

PrivIty has a long way to go to hose down all the critical comment it has engendered.

May the Schwarzman be with it.


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