NEW YORK, March 22 (Reuters) - Blackstone Group may be planning to go public but it is not shedding its private ways, according to its first filing about a planned $4 billion offering.
The proposed initial public offering, which will be the first by a major private equity firm in the United States, will give common unitholders precious little insight into the affairs of the behemoth or any real control.
Blackstone’s senior managing directors will operate and manage the new company and, unlike in a conventional corporation, common unitholders will have only limited voting rights and almost no ability to influence the company or even obtain information, according to the filing made on Thursday.
“Our partnership agreement contains provisions limiting the ability of our common unitholders to call meetings or to acquire information about our operations, as well as other provisions limiting the ability of our common unitholders to influence the manner or direction of our management,” the filing read.
For the few matters on which common unitholders will be able to vote their power will be limited because Blackstone’s senior managing directors will be given special voting powers.
As well, the new company says its structure means that it will be exempt from some major corporate governance rules of the New York Stock Exchange, including those requiring a majority of independent directors on the board and fully independent committees for compensation, corporate governance and director nominations.
A public Blackstone will also not be required to hold annual meetings for common unitholders, the filing said.
The company also does not plan to provide investors or analysts with forecasts for expected quarterly and annual results, it stressed. This lack of forecasting could create volatility in the share prices, the filing acknowledged.
Blackstone will differ from many other private companies going public by largely preserving its current structure, the filing says.
As a public company, Blackstone will continue using debt to enhance its returns. The company anticipates its debt-to-equity ratio will eventually rise to levels in the range of 3:1 to 4:1.
The company also acknowledged conflicts of interest between its partners and affiliates and said other conflicts of interest may continue to arise.
Senior managing directors may also be distracted because they own other investments, which will be outside the public company.
“As a result, the time and attention that our senior managing directors and employees devote to these non-contributed assets will not financially benefit us and may reduce the time and attention these individuals devote to our business,” Blackstone said in the filing.
Additional reporting by Yung Kim and Michael Flaherty in New York