Schwarzman Says Scrutiny of Private Equity May Pay Off

Oct. 2 (Bloomberg) -- Bloomberg's Jason Kelly discusses his conversation with Blackstone founder Stephen Schwarzman and the headwinds that impact the private equity industry. He speaks on Bloomberg Television's "Market Makers."

Private equity’s higher profile during the 2012 U.S. presidential election may ultimately help the buyout industry, Blackstone Group LP (BX) Chairman Stephen Schwarzman said.

“There’s a point of view that these businesses have performed very well for institutions,” Schwarzman said in an interview on “Money Moves with Deirdre Bolton” that aired today on Bloomberg Television. “Ironically, it gave the public and other people a chance to think through these arguments.”

Opponents of Bain Capital LLC founder Mitt Romney, the Republican presidential nominee, have attacked his business record. Ads accused Bain and Romney of closing factories and sending jobs overseas, criticisms that forced competitors like Blackstone to answer questions about job creation, fees and returns.

Schwarzman, who has said he supports Romney, said investors have largely looked past the attacks and continue to be interested in investing in private equity and other so-called alternative assets.

“We have not seen any of the blow back that you might expect,” he said.

That’s in part because private equity’s main backers are public pensions, college endowments and sovereign wealth funds, who are seeking higher returns from Blackstone and its rivals as interest rates are at historic lows and returns from stocks have been volatile.

$3 Trillion

Private equity as an industry comprises about $3 trillion in assets globally and owns brand-name companies from Toys “R” Us Inc. to Hertz Global Holdings Inc. (HTZ) Blackstone owns Hilton Worldwide, as well as Merlin Entertainments Group Ltd., whose theme parks include Legoland.

Blackstone also has taken advantage of stricter regulatory requirements for traditional and investment banks that came as a result of the global financial crisis of 2008 and 2009. As banks such as Goldman Sachs Group Inc. (GS) have pared their activities in principal investing, more money has flowed to Blackstone, which has more than $190 billion in assets.

Schwarzman has grown businesses beyond corporate buyouts, including real estate, credit and hedge funds.

To contact the reporter on this story: Jason Kelly in New York at jkelly14@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

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