Dec. 12 (Bloomberg) -- Blackstone Group LP, the world’s biggest private-equity firm, plans to eliminate about 70 jobs as profits from leveraged buyouts decline, according to two people familiar with the matter.

The layoffs, representing about 7 percent of Blackstone’s 1,000 workers, will affect most of the New York-based company’s business units, said the people, who asked not to be named because the decisions haven’t been made public. A Blackstone official declined to comment.

Blackstone in November reported a quarterly loss of $502.5 million, its largest since going public in June 2007. Closely held Carlyle Group, the second-largest buyout firm by assets, said earlier this month it will cut 100 people, or about 10 percent of the workforce.

“The buyout business is downsizing them,” said Michael Holland, chairman and founder of Holland & Co. in New York, which oversees $4 billion, and a former Blackstone partner. “Carlyle and Blackstone are private-equity leaders. No doubt others will follow with their own layoffs.”

Blackstone’s initial public offering came as a two-year LBO boom was coming to a halt. The stock has dropped about 80 percent from the $31-a-share IPO price. Shares rose 3 cents to $6.46 at 10:09 a.m. in New York Stock Exchange composite trading.

‘Strong’ Position

Besides buying and selling companies, Blackstone invests in real estate, manages hedge funds and runs a merger-advisory business. Stephen Schwarzman, who founded Blackstone in 1985 with Peter G. Peterson, his former boss at Lehman Brothers Holdings Inc., has said he’s optimistic about the firm’s prospects during the current economic decline.

“We are in an extremely strong financial position,” the 61-year-old Schwarzman said at a conference last month in New York.

Blackstone in 2007 raised the industry’s largest buyout fund at $21.7 billion and has since set out to raise its next pool. Traditional private-equity investors including pension funds, endowments and sovereign wealth funds, are cooling to new buyout funds as transactions slow.

Private-equity firms have announced $203 billion in deals this year, a 70 percent decline from the same period in 2007, according to data compiled by Bloomberg.

“These firms are doing fewer deals that are obviously less profitable, so there is less revenue to spread around,” said Holland. “Schwartzman understands that in distressed circumstances comes opportunity. No doubt he’ll be selectively adding as well.”

To contact the reporters on this story: Jason Kelly in New York at jkelly14@bloomberg.net; Jonathan Keehner in New York jkeehner@bloomberg.net.

Last Updated: December 12, 2008 10:12 EST