Blackstone Q4 loss crushes value of Chinese gov investment

The Chinese government invested $3 billion in Blackstone in May 2007. At the time, it looked like they were getting a deal by buying in at a 4.5% discount to the IPO price of $31. Since then, the price of BX has plummeted from a high of $35 in July 2007 to $14 today. While this is a long-term investment, the paper loss of more than $1.5 billion, in both absolute and relative terms, is breathtaking. Significantly, according the CEO, it is "unclear" when things will turn around.



Chinese bloggers were critical of this deal. Brace yourself for another firestorm of controversy.





From 3/10/2008 Seattle P-I:

Blackstone posts 4Q loss of $170 million



NEW YORK -- Private equity firm Blackstone Group LP said Monday it swung to a loss during the fourth quarter due to a write-down on its investment in bond insurer Financial Guaranty Insurance Co. and deterioration in the credit markets.



Blackstone, which went public in June, lost $170 million during the fourth quarter, compared with earnings of $1.18 billion during the final quarter in 2006.



Adjusted net income, which was adjusted for special revenues and expenses tied to the company's public offering, fell to $88 million, or 8 cents per share, from $808.1million, or 72 cents per share, during the year-ago period.



Blackstone Chief Executive Stephen Schwarzman said in a statement deterioration in the credit and fixed income markets during the second half of 2007 reduced the level of new investments, transaction fees and appreciation on Blackstone's portfolio of investments.



Schwarzman said those problems have continued into 2008 and it is unclear when conditions will improve.





Blackstone shares fell 3.6 percent to $14.05 in morning trading. The stock, which debuted last June at $31, touched an all-time low of $13.82 at one point in the session.