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Blackstone Valuation May Jump 50% With C-Corp, Analyst Says

Updated on
  • Credit Suisse note says switch depends on KKR’s valuation
  • Share prices of KKR and Ares have outpaced Blackstone

Blackstone Group LP could convert into a corporation from a partnership if KKR & Co.’s planned switch results in a significant increase in valuation over the next year, according to a Credit Suisse analyst note.

New York-based Blackstone would likely see a more than 50 percent improvement in its valuation and expand its investor base by converting to a C-corp, according to analyst Craig Siegenthaler. The private-equity firm could convert to the new structure as early as 2019, the note said. Blackstone didn’t immediately respond to a request for comment.

KKR and Ares Management LP are the first major alternative asset managers to move to change structures and take advantage of the lower corporate tax rate enacted by the Trump administration. The switch to a C-corp also enables firms to be included in indexes, which could increase stock valuations and mutual fund ownership.

Since Ares announced its conversion plans in February, the company and KKR have seen their stock prices outpace Blackstone. KKR announced its intention to switch on May 3.

(Updates with date of KKR announcement to switch to a C-corp in last paragraph.)
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