Los Angeles, CA (PressExposure) July 27, 2007 -- Blackstone Group LP, a private-equity corporate heavyweight based in New York City is expected to have an initial public offering (IPO) of its units starting June 25. However, its investors were cautioned that certain changes in the tax laws included in a bill to be passed before the Congress might affect their future earnings.
According to the corporation, the tax law bill that proposes changes would oppose the efforts to tax them as a financial corporation rather than as a business partnership. The company's taxes may double up in the next five years if the legislation being proposed would be passed by the Senate.
Economic analysts contemplated that the Chief Executive of Blackstone, Stephen Schwarzman spent the weekend weighing options if opening the company to the public may be worth having its advantageous tax arrangements lost. Considering the fact that one of Blackstone's reasons to hold an IPO is to loosen up its top executive's investments, partially. Another is to produce new capital to use as an incentive in keeping and attracting a new roster of management executives.
The Senate's Finance Committee leaders introduced the tax changes bill late on Thursday and there were speculations that it may disrupt Blackstone's IPO plans. However, the firm accepted the challenges the new bill would represent.
The Corporate Library's founder, Nell Minow believed that Schwarzman would go on with the IPO. Some in the industry may still hold off on each of their plans, though depending on the appreciation of the Blackstone's IPO even after the tax propositions.
Blackstone would not be able to pass up the chance on tapping into $4 billion of capital at the very least, that they may make from going on with the IPO. It is the biggest flotation expected in this year. This is according to Minow and to other analysts' belief.
The IPO would give a chance for stakeholders to buy into the Blackstone LP and give them a voting interest of almost 13.6% in the management board. However, it would not give them direct participation in the properties and companies being managed by the firm.
The IPO may value the entire company at around $32 billion. Shares are expected to be priced from $29 to $31. Blackstone expects to produce from $3.87 billion to $4.14 billion from such business engagement.