Saturday, May 16, 2009

Blackstone's Asian Hedge Fund Doesn't Make

The Blackstone Group is a huge private equity underwriter (PEU) founded by Pete Peterson and Stephen Schwarzman. Last fall, the firm announced a $1 billion hedge fund specializing in Asian mergers and reorganizations. They hired an all star hedge fund manager. Fundraising lagged despite a $150 million commitment from Blackstone and its employees. Bloomberg reported Blackstone pulled the plug on the project. Hedge fund staffers rejoined their old firm.

New funds not making, capital calls on old funds? Times are tough for the PEU boys. My guess is President Obama will make things better in the near future. Private equity will likely avoid regulatory scrutiny and the President loves public-private partnerships. Who wouldn't love yatchloads of taxpayer cash and protected franchises? Uncle Sam has to make up for declining PEU fundraising and access to credit. The Carlyle Group's David Marchick said much the same in his testimony to the Senate Banking Subcommittee on Economic Policy.