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Blackstone Inc.
Blackstone Inc. is an American alternative investment management company based in New York City. It was founded in 1985 as a mergers and acquisitions firm by Peter Peterson and Stephen Schwarzman, who had previously worked together at Lehman Brothers. Blackstone's private equity business has been one of the largest investors in leveraged buyouts in the last three decades, while its real estate business has actively acquired commercial real estate across the globe. Blackstone is also active in credit, infrastructure, hedge funds, secondaries, growth equity, and insurance solutions. As of May 2024, Blackstone has more than $1 trillion in total assets under management, making it the world's largest alternative investment firm.
Blackstone was founded in 1985 by Peter G. Peterson and Stephen A. Schwarzman with US$400,000 (equivalent to $1.2 million in 2024) in seed capital. The founders derived their firm's name from their names: "Schwarz" is German for "black"; "Peter", "petros" (πέτρος, masculine), or "petra" (πετρα, feminine) means "stone" or "rock" in Greek. The two founders had previously worked together at Lehman Brothers. There, Schwarzman served as head of global mergers and acquisitions business. Prominent investment banker Roger C. Altman, another Lehman veteran, left his position as a managing director of Lehman Brothers to join Peterson and Schwarzman at Blackstone in 1987, but left in 1992 to join the Clinton administration as Deputy Treasury Secretary and later founded advisory investment bank Evercore Partners in 1995.
Blackstone was originally formed as a mergers and acquisitions advisory boutique. It advised on the 1987 merger of investment banks E. F. Hutton & Co. and Shearson Lehman Brothers, collecting a $3.5 million fee.
From the outset in 1985, Schwarzman and Peterson planned to enter the private equity business but had difficulty in raising their first fund because neither had ever led a leveraged buyout. Blackstone finalized fundraising for its first private equity fund in the aftermath of Black Monday, the October 1987 global stock market crash. After two years of providing strictly advisory services, Blackstone decided to pursue a merchant banking model after its founders determined that many situations required an investment partner rather than just an advisor. The largest investors in the first fund included Prudential Insurance Company, Nikko Securities and the General Motors pension fund.
Blackstone also ventured into other businesses, most notably investment management. In 1987 Blackstone entered into a 50–50 partnership with the founders of BlackRock, Larry Fink (current CEO of BlackRock), and Ralph Schlosstein (CEO of Evercore). The two founders, who had previously run the mortgage-backed securities divisions at First Boston and Lehman Brothers, respectively, initially joined Blackstone to manage an investment fund and provide advice to financial institutions. They also planned to use a Blackstone fund to invest in financial institutions and help build an asset management business specializing in fixed income investments.
As the business grew, Japanese bank Nikko Securities acquired a 20% interest in Blackstone for a $100 million investment in 1988 (valuing the firm at $500 million). Nikko's investment allowed for a major expansion of the firm and its investment activities. The growth firm also recruited politician and investment banker David Stockman from Salomon Brothers in 1988. Stockman led many key deals in his time at the firm but had a mixed record with his investments. He left Blackstone in 1999 to start his own private equity firm, Heartland Industrial Partners, based in Greenwich, Connecticut.
The firm advised CBS Corporation on its 1988 sale of CBS Records to Sony to form what would become Sony Music Entertainment. In June 1989, Blackstone acquired freight railroad operator CNW Corporation. The same year, Blackstone partnered with Salomon Brothers to raise $600 million to acquire distressed thrifts in the midst of the savings and loan crisis.
In 1990, Blackstone launched its hedge funds business, initially intended to manage investments for Blackstone senior management. The same year, Blackstone formed a partnership with J. O. Hambro Magan in the UK and Indosuez in France. Blackstone and Silverman also acquired a 65% interest in Prime Motor Inn's Ramada and Howard Johnson franchises for $140 million, creating Hospitality Franchise Systems as a holding company.
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Blackstone Inc.
Blackstone Inc. is an American alternative investment management company based in New York City. It was founded in 1985 as a mergers and acquisitions firm by Peter Peterson and Stephen Schwarzman, who had previously worked together at Lehman Brothers. Blackstone's private equity business has been one of the largest investors in leveraged buyouts in the last three decades, while its real estate business has actively acquired commercial real estate across the globe. Blackstone is also active in credit, infrastructure, hedge funds, secondaries, growth equity, and insurance solutions. As of May 2024, Blackstone has more than $1 trillion in total assets under management, making it the world's largest alternative investment firm.
Blackstone was founded in 1985 by Peter G. Peterson and Stephen A. Schwarzman with US$400,000 (equivalent to $1.2 million in 2024) in seed capital. The founders derived their firm's name from their names: "Schwarz" is German for "black"; "Peter", "petros" (πέτρος, masculine), or "petra" (πετρα, feminine) means "stone" or "rock" in Greek. The two founders had previously worked together at Lehman Brothers. There, Schwarzman served as head of global mergers and acquisitions business. Prominent investment banker Roger C. Altman, another Lehman veteran, left his position as a managing director of Lehman Brothers to join Peterson and Schwarzman at Blackstone in 1987, but left in 1992 to join the Clinton administration as Deputy Treasury Secretary and later founded advisory investment bank Evercore Partners in 1995.
Blackstone was originally formed as a mergers and acquisitions advisory boutique. It advised on the 1987 merger of investment banks E. F. Hutton & Co. and Shearson Lehman Brothers, collecting a $3.5 million fee.
From the outset in 1985, Schwarzman and Peterson planned to enter the private equity business but had difficulty in raising their first fund because neither had ever led a leveraged buyout. Blackstone finalized fundraising for its first private equity fund in the aftermath of Black Monday, the October 1987 global stock market crash. After two years of providing strictly advisory services, Blackstone decided to pursue a merchant banking model after its founders determined that many situations required an investment partner rather than just an advisor. The largest investors in the first fund included Prudential Insurance Company, Nikko Securities and the General Motors pension fund.
Blackstone also ventured into other businesses, most notably investment management. In 1987 Blackstone entered into a 50–50 partnership with the founders of BlackRock, Larry Fink (current CEO of BlackRock), and Ralph Schlosstein (CEO of Evercore). The two founders, who had previously run the mortgage-backed securities divisions at First Boston and Lehman Brothers, respectively, initially joined Blackstone to manage an investment fund and provide advice to financial institutions. They also planned to use a Blackstone fund to invest in financial institutions and help build an asset management business specializing in fixed income investments.
As the business grew, Japanese bank Nikko Securities acquired a 20% interest in Blackstone for a $100 million investment in 1988 (valuing the firm at $500 million). Nikko's investment allowed for a major expansion of the firm and its investment activities. The growth firm also recruited politician and investment banker David Stockman from Salomon Brothers in 1988. Stockman led many key deals in his time at the firm but had a mixed record with his investments. He left Blackstone in 1999 to start his own private equity firm, Heartland Industrial Partners, based in Greenwich, Connecticut.
The firm advised CBS Corporation on its 1988 sale of CBS Records to Sony to form what would become Sony Music Entertainment. In June 1989, Blackstone acquired freight railroad operator CNW Corporation. The same year, Blackstone partnered with Salomon Brothers to raise $600 million to acquire distressed thrifts in the midst of the savings and loan crisis.
In 1990, Blackstone launched its hedge funds business, initially intended to manage investments for Blackstone senior management. The same year, Blackstone formed a partnership with J. O. Hambro Magan in the UK and Indosuez in France. Blackstone and Silverman also acquired a 65% interest in Prime Motor Inn's Ramada and Howard Johnson franchises for $140 million, creating Hospitality Franchise Systems as a holding company.