Buyout kingpin Stephen Schwarzman finds himself knocking on more doors and pressing more flesh than ever before as the private-equity boom grinds to a halt.
Lately, Schwarzman has become the centerpiece of his Blackstone Group’s global effort to assuage investors’ badly frayed nerves as it pushes to raise some $20 billion in fresh capital.
But with Wall Street in tatters and Blackstone’s own publicly-traded firm down nearly 70 percent on the year, it’s turning out to be a huge challenge for the private equity billionaire.
Sources say that Schwarzman has personally been turning up at meetings with university endowments, deep-pocketed investors and other entities he hopes will be limited partners in his new investment vehicles.
“[Steve’s] been working harder than ever,” said one person familiar with Schwarzman’s latest efforts.
His marketing pitch has been similar to public statements he’s made over the past few weeks: “It’s the right time for investors to be investing with us to make the highest returns.”
However, typical investors in buyout shops – including universities, pensions and other wealthy investors with hundreds of billions of capital to place – have been whacked by the market’s freefall.
That’s forced those limited partners to seriously consider reneging on their commitments to invest with many big buyout shops.
So far investors have not backed out on commitments to Blackstone, one source said, but the pressure has been tremendous.
Schwarzman’s glad-handing comes as Blackstone has posted its biggest quarterly loss in its year and a half under the public spotlight. Excluding some costs, losses totaled $502.5 million, or 44 cents a share, compared with a profit of $234 million, or 21 cents, a year earlier.
So far, Schwarzman has been able to raise some $8 billion for his new fund – $12 billion shy of his targeted amount, sources say.
But even as the gilded age of buyout shops seemingly comes to an end, Schwarzman is betting that he can pull off a turnaround.
“If you look at the last recession, there were times in the 1990-1 period where it wasn’t much fun to be in the private-equity business in terms of one’s existing portfolio. But at the end of the day, this fund generated 19 percent returns,” he’s stated publicly.