Privacy’s passé!

IIPM PUBLICATION

Blackstone CEO, Stephen Schwarzman, calls disclosures as a “tyranny of quarterly earnings”! But of late, PE firms seem to have decided to go public. Blackstone itself will offload a minority stake to the public in the near future, becoming the first PE company to do so. Josh Lerner, Professor, Investment Banking, Harvard Business School, states, “There are inherent problems with PE firms listed at exchanges... income of PE firms are realised at irregular intervals (only when the asset is sold).” This is perhaps one reason why KKR Private Equity Investor LP – a unit of KKR & Apollo’s AP Alternative Assets LP – is still trading below its debut price.

Well, it’s a case of ‘damned if you do, damned if you don’t’. Issues abound for PE firms as they go public, but at the same time, the opportunity to improve valuations is compelling. Besides, this would also help tackle transparency concerns better, even if that means confronting some ‘tyrannical’ disclosures!

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative