Blackstone, Enter Stage Left

When traders take the floor of the New York Stock Exchange today, all eyes will be on BX -- the ticker symbol under which shares of the Blackstone Group will begin trading.

Blackstone raised $4.13 billion last night after its shares were priced at $31 -- at the high end of the anticipated range. Blackstone, one of the biggest private equity firms in the world, is now valued at $33.6 billion.

And that is no small achievement considering that at the moment, the future is looking dim for private equity firms. Bond yields are rising, which means that cheap debt to finance buyouts is getting harder and harder to come by.

Blackstone's tax bill, meanwhile, may also be heading higher. Senate tax writers are currently mulling over a change to the tax laws that, up until now, have saved listed private equity firms billions of dollars in taxes.

And on the eve of the offering, two Democratic Congressmen, Henry Waxman of California and Dennis Kucinich of Ohio wrote to the chairman of the Securities and Exchange Commission, asking him to postpone the I.P.O. until Congress has had a chance to hold hearings on its risks to the public and investors.

"Small investors, in particular, would benefit from more consideration by the Securities and Exchange Commission and Congress of the proposed IPO,'' they wrote.

Expensive debt and a higher tax rate spell trouble for profitability and may make it difficult for private equity firms like Blackstone to continue to have the strong performance they have enjoyed to date.

Would-be investors in Blackstone may have another worry: the high cost of compensating its masters of the universe are likely to put the firm in the red for the next couple years.

And don't forget that when you play ball with Steve Schwarzman, he makes all the rules. Blackstone has insisted on retaining total management control after the offering. That means that stakeholders can wave goodbye to any influence on the direction of the company going forward.

Even the underwriters, including Morgan Stanley and Citigroup, have had to bow to Blackstone's industry power, agreeing to cut their usual fees almost in half for executing the I.P.O.

So does Blackstone's decision to move the offering date suggest the firm already has enough buyers lined up for its 153 million unit float? Or is Schwarzman simply eager to take the money and run?

The Financial Times reports that while U.S. mutual funds may be cool on the idea of an investment, the demand for shares of Blackstone has been very strong internationally.

Since Blackstone is first in the water, Friday's performance will be an important indicator as still-private peers such as Kohlberg Kravis Roberts, Texas Pacific Group and Carlyle Group decide on a future direction.

But not everyone is interested in waiting to see how Blackstone does. Man Group of Britain, the world's biggest listed hedge fund firm, has already set a price range of $36 to $39 for an offering of its American brokerage arm, MF Global. And KKR has already hired Morgan Stanley and Citigroup for a possible offering this year, Charlie Gasparino reported on CNBC.

A strong performance out of BX tomorrow in the face of such worrisome circumstances for private equity would confirm at least one thing -- Blackstone's brand equity is titanium on Wall Street.

by Liz Gunnison