July 27 (Bloomberg) -- Blackstone Group LP shares closed at a new low, making the leveraged buyout firm the worst-performing initial public offering this year.

Blackstone has tumbled 22 percent since the New York-based company sold shares in June. Fortress Investment Group LLC of New York, the first U.S. buyout firm to go public, has fallen 47 percent from a high of $37 in February. The slump occurred as investors shunned riskier bonds and loans used to fund takeovers.

``If you believe private equity is under some pressure, you are definitely going to take it out on these stocks,'' said Frederick Lane, managing director of Boston-based investment bank Lane Berry & Co.

Investors had clamored for a piece of Blackstone, the most profitable buyout firm, sending the shares up 13 percent when they started trading at $31 on June 22. They've fallen in 17 of the 24 days since, a rout that may hamper New York-based Kohlberg Kravis Roberts & Co.'s plan to raise about $1.25 billion in an IPO later this year.

Shares of Blackstone, led by Stephen Schwarzman, fell $1.40 to $24.30 in New York Stock Exchange composite trading, the lowest closing price.

Ryan O'Keefe, a London-based spokesman for KKR, declined to comment.

Schwarzman's Profit

Schwarzman, 60, and Blackstone co-founder Peter G. Peterson, 81, sold a combined $2.56 billion of stock in the Blackstone IPO. Kravis and Roberts won't sell shares, according to the company's regulatory filing with the U.S. Securities and Exchange Commission.

Blackstone has fallen the most among companies that raised at least $500 million through a conventional IPO this year. The 10 largest U.S. IPOs in 2007 have returned an average of 14 percent in their first trading month and 5.2 percent this year. The Standard & Poor's 500 Index, the benchmark for the U.S. stock market, has gained 2.9 percent this year.

Interactive Brokers Group Inc., a Greenwich, Connecticut- based electronic market-maker that raised $1.2 billion in May through an auction, has seen its shares drop 24 percent.

LBO firms typically pay for acquisitions with debt backed by the target's assets. They pay off the borrowing using cash flow and profit by selling the company three to five years later.

`Extreme Leverage'

``We looked at Blackstone and Fortress this year, and they were using extreme leverage to invest,'' Kenneth Heebner, manager of the $3 billion CGM Focus Fund, said today in an interview in Boston. ``People who are invested in these pools might want to reconsider their investments.''

KKR, co-founded by 63-year-old cousins Henry Kravis and George Roberts, needs to raise money for some of the $136 billion of takeovers that it has announced this year, including the purchase of credit-card payment processor First Data Corp. of Greenwood Village, Colorado.

Chrysler, the Auburn Hills, Michigan-based automaker, and Alliance Boots Plc, the U.K. pharmacy chain that KKR is acquiring, failed to find buyers this week for $20 billion of loans. Ten banks, including Deutsche Bank AG and JPMorgan Chase & Co., were stuck holding the debt.

``Deals in the pipeline are going through some trauma,'' said Louis Bevilacqua, a partner and chairman of the mergers and acquisitions practice at New York-based Cadwalader Wickersham & Taft LLP. ``They've got to get buyers and sellers back into equilibrium.''

An index allowing investors to bet on the U.S. leveraged loan market fell to the lowest since it began trading two months ago. The LCDX index declined as much as 1.8 to 91.47 today, according to Lehman Brothers Holdings Inc. It rebounded to 91.80 as of 4:09 p.m. in New York.

To contact the reporters on this story: Jason Kelly in New York at jkelly14@bloomberg.net; Elizabeth Hester in New York at ehester@bloomberg.net.

Last Updated: July 27, 2007 17:15 EDT