Buffett's LBO Criticism Has `Agenda,' Blackstone's Blitzer Says

(Corrects verb to ‘love’ in fourth paragraph of story published yesterday.)

Billionaire investor Warren Buffett’s criticism of leveraged buyout firms helps his “agenda” as a rival of those companies, Blackstone Group LP senior managing director David Blitzer said.

Buffett’s Berkshire Hathaway Inc. competes with private equity firms in acquiring assets, Blitzer, 41, told reporters on the sidelines of the British Private Equity and Venture Capital Association’s annual conference in London today.

He “has an agenda as relates to buying assets and he’s running around competing with us, so I’d take a little bit of a grain of salt,” Blitzer said. “That said, Buffett is Buffett. He’s obviously amazing, but he’s got his own agenda which at least one should be aware of.”

Buffett, chairman of Omaha, Nebraska-based Berkshire, said last month he avoids acquiring companies from LBO firms because they focus on “exit strategy” and “don’t love the business.” The 80-year-old also said he’d never acquired a company out of private-equity ownership.

Leveraged buyout firms like Blackstone, the world’s largest, pool money from investors to take over companies, financing the purchases mostly with debt, with the intention of selling them within five years for a profit. New York-based Blackstone was founded in 1985 by former Lehman Brothers executives Stephen Schwarzman and Peter Peterson.

Photographer: Stefen Chow/Bloomberg

Warren Buffett, chairman of Berkshire Hathaway Inc. Close

Warren Buffett, chairman of Berkshire Hathaway Inc.

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Photographer: Stefen Chow/Bloomberg

Warren Buffett, chairman of Berkshire Hathaway Inc.

Buffett outbid Blackstone when he acquired underwear maker Fruit of the Loom Inc. out of bankruptcy in 2002. He didn’t immediately respond to a request for comment e-mailed to his assistant, Carrie Kizer.

Blitzer, who’s worked at Blackstone since 1991 and started the firm’s private equity unit in Europe, also told the conference British investors are too skeptical about buying companies being sold by private equity firms in initial public offerings.

“There is an incredible amount of emotion and misinformation out there in the marketplace,” he said. “Private equity-backed IPOs perform in-line or better than all other IPOs.”

To contact the reporters on this story: Simon Clark in London at sclark4@bloomberg.net;

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net.

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