Blackstone plans portfolio IPOs: source

DUBAI (Reuters) - Private equity firm Blackstone Group plans to take advantage of improved equity markets to list up to eight of its portfolio companies, according to a source who received a letter the firm sent to investors.

Blackstone CEO Stephen Schwarzman stands during the Yale CEO Summit in New York December 11, 2008. REUTERS/Shannon Stapleton

Blackstone’s CEO, Stephen Schwarzman, told investors that “at least for private equity, the worst is behind the industry,” a second source who has seen the letter said.

The letter, sent on Friday, shows that Blackstone is positioning one company -- hospital staffing firm Team Health -- for an IPO and is evaluating the potential for seven others, the first source said.

Blackstone shares traded as much as 8.9 percent higher on the New York Stock Exchange, and the news helped to lift overall market sentiment.

One problem private equity firms have faced during the market turmoil is the inability to exit investments through initial public offerings or by selling to companies in the same industry as the target -- known as “strategic buyers.”

But private equity firms have been making the most of the improved stock markets to exit some of their investments.

Rival Kohlberg Kravis Roberts & Co’s Dollar General filed for an initial public offering of up to $750 million in August and the company is considering others, sources previously told Reuters.

The letter also says that Blackstone is separately in the process of five sales of companies it owns. Of these, four have already been announced and one is imminent, the source said.

One of the exits is Kosmos Energy’s Ghanaian oil interests, the source who has the letter said. Sources previously told Reuters that Exxon Mobil has agreed to buy Kosmos Energy’s stake in the Jubilee field. Kosmos is backed by Blackstone and Warburg Pincus.

Those five realizations are expected to generate aggregate proceeds of $2.8 billion, the source cited the letter as saying.

Blackstone declined to comment.

Blackstone’s chief operating officer, Tony James, said in August that should the markets hold up and continue their present trend, there will probably be some IPOs from Blackstone’s portfolio in the next 12 months, although he stressed he was not promising a lot of exits.

“There are a couple of companies that are definitely candidates,” James said at the time. “There has also been a rebound in the interest of strategic buyers,” he added.

Team Health Holdings Inc, a hospital staffing company owned by a unit of Blackstone, earlier in October filed to raise as much as $100 million in an initial public offering, according to a prospectus filed on Tuesday with the U.S. Securities and Exchange Commission.

Details from the letter were earlier reported by the Financial Times.

Blackstone shares were up 7.6 percent at $15.98 in early afternoon trading.

Reporting by Megan Davies, editing by Douwe Miedema, Hans Peters and Matthew Lewis