The Blackstone Group L.P. (NYSE:BX) said this morning that it plans to spin off its financial advisory business into a separate company. The firm said in a press release posted on its website that it expects the division to be a separate, publicly traded firm by March.
The Blackstone Group separates businesses
Blackstone said this morning that its financial and strategic advisory businesses, as well as its reorganization and restructuring advisory business and its Park Hill fund placement businesses will be spun off. They will be combined with the independent financial advisory firm, PJT Partners. The firm said the new business will be publicly traded and led by PJT founder Paul J. Taubman.
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After the separation is complete, current Blackstone unitholders will own about 65% of the new business. Also employees of the firm’s advisory business will roll their own Blackstone units into the new firm. Together with Taubman, they will own about 35% of the new business. Taubman will be chairman in addition to CEO, and there will be four independent directors on the new firm’s board.
Blackstone said they intend the transaction to be tax-free for itself and also its unitholders.
Speculation about the Blackstone spinoff
Before Blackstone even made the announcement this morning, Katie Benner wrote in a post on Bloomberg View that the firm might be the next spinoff. She cited an unnamed source who suggested that this morning’s news was coming. Her source was also right about the tie with PJT Capital, as the person speculated that the firm might be the buyer of Blackstone’s financial advisory business.
She noted that Blackstone’s financial advisory segment grew by 14.6% in 2013, hitting $420.2 million. That’s compared to a 63.9% growth rate for the entire firm. Shares of Blackstone are trading at around the same price where they were when they opened at the time of the firm’s initial public offering in 2007. Year today, the firm’s stock has declined by about 4.8%, while the S&P 500 gained 5.3%.