Bloomberg News

Blackstone’s James Cuts Stake in Company With Third Sale in Year

October 28, 2013

Blackstone Group LP (BX:US) President Tony James is reducing his stake in the private-equity firm he helped build into the world’s largest manager of alternative assets over the past 11 years.

James sold 3.25 million shares of New York-based Blackstone between Oct. 23 and Oct. 25 at prices ranging from $26.71 to $27.85, according to a filing with the U.S. Securities and Exchange Commission last week. James has sold at least 8.25 million shares this year in three transactions, about a fifth of the equity he held in Blackstone at the beginning of the year, according to regulatory filings (BX:US).

James said he has no plans to leave the firm. Some colleagues inside Blackstone have been speculating that the 62-year-old may be seeking a new career outside of private equity, according to people familiar with the firm, who asked not to be identified because the matter was internal.

“I am not leaving Blackstone,” James said when reached by telephone over the weekend. “I will not leave Blackstone in years.”

Peter Rose, a Blackstone spokesman, declined to comment on James’s share sale.

Blackstone has rallied (BX:US) 71 percent this year and this month reached the highest level since 2007, the year the firm went public.

This month’s transactions were valued at about $88.6 million, the filing showed. They were made through a company controlled by James, his spouse and a trust for his children. In two other sales this year, James sold 3.5 million shares, valued at about $64.2 million in February and 1.5 million shares, worth about $34.2 million, in July.

Previous Sales

James previously made a large divestment in April and May of 2011, when he sold 1.25 million shares, filings show.

Tom Hill, Blackstone’s vice chairman, also sold shares this year as the stock rallied. The 65-year-old, who runs the firm’s fund-of-hedge-funds business, sold 1 million shares in February and March, according to filings, earning $19 million.

James holds about 33.7 million shares following his sales this year, compared with 231.9 million owned by Stephen Schwarzman, the firm’s co-founder and chief executive officer, and 40.6 million shares held by Jon Gray, Blackstone’s global head of real estate, who joined the firm in 1992.

A former chairman of global investment banking and private equity at Credit Suisse First Boston, James joined Blackstone in 2002 and has become one of the most senior executives afterSchwarzman, 66. The two approve all investment decisions by the firm.

James’s Tenure

During James’s tenure at Blackstone, he engineered the firm’s 2008 acquisition of GSO Capital Partners LP, the credit business run by his friend and colleague Bennett Goodman. GSO’s assets have grown to $63 billion from about $10 billion since Blackstone bought it.

James also played a role in fashioning Blackstone’s 2007 IPO, when the company sold shares at $31 apiece before the onset of the financial crisis. Blackstone fell as low as $3.87 in February 2009 before rebounding.

The firm oversees an industry-record $248 billion in private-equity, credit, property and hedge-fund assets. In a push led by Schwarzman and later James, Blackstone diversified soon after its founding to grow assets and reduce its reliance on volatile buyout earnings. Profit, measured by economic net income, is up 49 percent to $2 billion in the first nine months of the year compared with the same period last year.

Peers such as Carlyle Group LP (CG:US), KKR & Co. (KKR:US) and Apollo Global Management LLC (APO:US) have followed Blackstone in selling shares to the public and starting new business lines to manage assets besides buyout holdings. Carlyle, the second-largest alternative-asset manager, oversees $180 billion.

Succession Plans

James received $66 million in 2012, including a $30 million bonus, according to Blackstone’s annual 10-K, filed with the SEC in March. That followed bonuses of $50 million in the previous two years combined. The rest of his annual payout has typically included dividends on his stock ownership, a salary and his share of investment profits.

James said in an interview with Bloomberg Television’s Erik Schatzker last month that the firm has a deep management team and succession plans for any of the group heads, as well as himself and Schwarzman.

“I love my job and I’ve got the best job in the world,” James said during the interview at the Clinton Global Initiative in New York. For him to leave, “it would take a job where I could really use all of my brain power. If I thought I could do something good for the world, I might consider that.”

To contact the reporters on this story: Devin Banerjee in New York at dbanerjee2@bloomberg.net; David Carey in New York at dcarey13@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net


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Companies Mentioned

  • BX
    (Blackstone Group LP/The)
    • $34.25 USD
    • -0.06
    • -0.18%
  • CG
    (Carlyle Group LP/The)
    • $27.32 USD
    • 0.31
    • 1.13%
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