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New York Said to Cancel Blackstone Meeting as Pensions Seek Wien Disavowal
The New York City Comptroller’s office backed out of a scheduled meeting with Blackstone Group LP and trustees for the city pension funds who want the firm to repudiate chief strategist Byron Wien’s statement that public- employee retirement benefits are too high.
Representatives of the funds, which are weighing new investments with the New York-based firm, had planned to sit down with Blackstone President Tony James on Jan. 7, according to two people with the direct knowledge of the matter. They were set to ask Blackstone to support public pension benefits in an advertisement in the Wall Street Journal, said the people, who asked not to be named because the discussions were private.
Lawrence Schloss, the city’s chief investment officer, canceled the meeting after the comptroller’s office was asked for comment today by Bloomberg News, one of the people said. Schloss works for Comptroller John Liu, who oversees the city’s $110 billion in pension assets.
“There is no meeting scheduled,” Michael Loughran, a spokesman for Liu, said in an e-mail. Schloss declined to comment. Peter Rose, a spokesman for Blackstone, said the firm “talks with our limited partners all the time about issues that concern them.”
Last January, Wien, 77, said in his annual forecast that taxpayers “literally can’t afford the benefits we have given our retirees in state and local governments and we have to change that.”
James, 59, met in May with pension representatives and sent a letter to Bud Larson, chairman of the New York City Employee Retirement System, saying “the benefits earned by state and local employees who have put in years of dedicated service should not be singled out and made vulnerable because of this crisis.”
In June, Joan Solotar, Blackstone’s senior managing director for public markets, wrote a letter saying that state and local pension funds have been the single largest investors with Blackstone since its founding in 1985.
“We are proud of the returns we have been able to achieve and the part those returns have played in helping states and cities keep the promises made to their employees,” Solotar wrote in the letter to Pensions & Investments magazine.
Blackstone’s response didn’t satisfy union representatives who sit on the city’s five pension boards and vote on which managers to hire and fire, the people said.
The city’s pensions committed $225 million to Blackstone’s latest private-equity fund last year. Three of the funds -- for police officers, firefighters and civilian employees -- are in the process of picking managers to oversee a new hedge-fund investment program.
The three funds, with combined assets of $64.5 billion as of March 31, hired hedge-fund consultant Aksia LLC in December to advise on formulating strategy, identifying new investments and monitoring portfolios, according to two people briefed on the matter.
Aksia declined to comment.
The city comptroller’s office, which makes recommendations to the funds’ boards, had already compiled a list of potential hedge fund-of-funds managers that included Blackstone and Baltimore-based Legg Mason Inc.’s Permal Group, according to the people, who also asked not to be identified because the list hasn’t been made public. More than one manager probably will be chosen, according to the people.