Blackstone Buys Stake in Brokerage BTIG Through Blitzer’s Unit

  • Private equity firm invests with Tactical Opportunities Group
  • Known for stock trading, BTIG has been expanding into banking

Blackstone Group LP, the world’s biggest private-equity firm, is buying a stake in institutional brokerage BTIG LLC, providing cash for further growth.

The investment comes from funds managed by Blackstone’s Tactical Opportunities Group, a unit run by David Blitzer that’s invested in everything from oil tankers to Brazilian shopping malls, BTIG said in a statement. Blackstone is acquiring a passive, minority interest, according to the statement, which didn’t disclose the size or financial terms.

BTIG, founded 12 years ago by Steve Starker and Scott Kovalik, has been capitalizing on a retreat by Wall Street’s biggest banks from some areas of trading since the financial crisis. Based in San Francisco and New York, it opened offices across the U.S., in Europe and Asia, attracted hedge fund clients, and now employs about 530 people. It said it will use Blackstone’s investment to expand globally.

It’s a “vote of confidence in our growth prospects,” Kovalik said in the statement. “We look forward to working together as we continue to build out our business.”

Basketball Bankers

BTIG also trades currencies and bonds, and has been adding investment bankers who underwrite stock offerings. Also among its minority investors are Goldman Sachs Group Inc. and Citic Securities Co., China’s largest brokerage.

Starker, 51, is a former Goldman Sachs partner. He joined that firm in 2000 when it bought brokerage Spear, Leeds & Kellogg, where he helped run the capital markets business. Kovalik, 52, rose to head of equity trading at Montgomery Securities, which was acquired by a Bank of America Corp. predecessor in 1997. The two left to found their own firms, then merged them.

Blitzer, who’s worked for Blackstone since 1991, was tasked with starting the Tactical Opportunities Group in 2011. He’s been making deals that were the traditional domain of Wall Street’s biggest banks before their retreat from proprietary investing. His group oversees more than $10 billion, according to a regulatory filing.

Both Starker and Blitzer are investors in basketball teams. Blitzer is an owner of the Philadelphia 76ers, and Starker was part of a group led by Ares Management LP’s billionaire co-founder Tony Ressler that bought the Atlanta Hawks for $730 million last year.

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