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FRANKFURT, Feb 27 (Reuters) - Raising private equity money through the public market is not yet a viable option for buyout firms, Blackstone Group Chief Executive Stephen Schwarzman said on Tuesday.
Schwarzman's comments came amid speculation more private equity funds will seek public money after the success of the initial public offering this month of Fortress Investment Group LLC FIG.N, a private investment fund.
“I think the public markets are over rated,” Schwarzman said, speaking on a panel at the annual Super Return private equity conference.
Schwarzman was seated near Todd Fisher of Kohlberg Kravis Roberts & Co., the firm that launched a publicly traded vehicle last year. The IPO raised $5 billion, nearly double what was expected from the firm.
“KKR destroyed the market for anyone else” mulling a publicly traded fund, he said, “which I think was their objective.” But “the idea that $5 billion looms large” was questionable, he added.
Schwarzman said when U.S. private equity firm Apollo Management tried to raise a similar fund it came up $1 billion short of its expectation.
“To divert yourself like that and then take on that cost, is really not worth it,” Schwarzman said.
Blackstone won shareholder approval this month for the buyout of Equity Office Properties Trust, the largest U.S. office landlord run by real estate mogul Samuel Zell. The deal, including debt, was worth $39 billion.
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