‘BX’ slowly climbs back above IPO price

Blackstone units began to trade today above their $31 IPO price, climbing back from the $28.75 low it hit last Friday, the stock’s first trading day. The market could change directions again next week as US congressmen begin hearings on private equity.

The Blackstone Group today began trading at and above its initial public offering price of $31 (€22.76) per unit. ‘BX’ units rose 2.8 percent during Friday trading on the New York Stock Exchange to close at $31.50.

Since its debut last Friday, Blackstone stock had been trading largely between $28.75 and $30 per unit, but following news of its $26 billion deal to acquire the Hilton hotel chain, the stock began to slowly climb on Thursday.

Despite growing concerns about a slowdown in the corporate credit market affecting private equity deals, a number of big buyouts agreed this week – including the C$51.7 billion BCE deal, the largest LBO to date – seem to have momentarily eased market fears that private equity has peaked.

That may change next week, as the first of several Congressional committees commences private equity-related hearings.

On Wednesday, the Senate Finance Committee will hold its first hearing on carried interest, which some legislators feel ought to be taxed as ordinary income at 35 percent rather than as capital gains at 15 percent.

Senate Finance will hear testimony from five witnesses: Eric Solomon, assistant secretary for tax policy for the US Treasury; Peter Orszag, director of the Congressional Budget Office; Andrew Donohue, director of the Securities and Exchange Commissions Division of Investment Management; Kate Mitchell, managing director at Scale Venture Partners; and Marc Gergen, a professor at The University of Texas School of Law who writes on subjects including federal tax relating to partnerships and tax abuse.

House Representative Sander Levin has already introduced a bill that would change the carried interest tax scheme.