Private equity firm Blackstone Group's
Stephen Schwarzman also said on Wednesday he was seeing more than green shoots of economic recovery, though the scale of growth through next year was still unclear.
We do not expect the U.S. economy to slip back into recession but we do believe that weak consumer spending and continued constraints on bank lending will dampen the U.S. economic recovery in 2010 and 2011, Schwarzman said at a conference.
While it would take several years before freely flowing but responsible credit was re-established, the private equity industry was in a radically different place than a year ago given signs of life in the bank financing market, he said.
We can certainly do transactions in the $3-$4 billion range at this stage in the cycle, he said on the sidelines of the conference. And with low leverage involved, deals of that size can use in excess of $1 billion equity.
Schwarzman said while he expected more deals ahead, Blackstone had been outbid by companies rather than private equity firms on several occasions recently.
He said the route to exiting acquisitions had opened, citing five sales -- of which four are complete and one imminent. If all these sales are completed, Blackstone's funds will receive about $2.8 billion, he said.
In a letter to investors sent Friday, which was obtained by Reuters, Schwarzman said these sales occurred at prices between 140-240 percent of Blackstone's year-end 2008 valuations.
He is evaluating the prospects for up to seven IPOs in addition to one already filed, which he said were spread across sectors and geographies.
No one knows how long the window will be open for IPOs, he said. Historically its been a pretty streaky kind of market; and it responds well to the prospects for economic growth.
Blackstone has been managing on portfolio companies by reducing or extending $10 billion of debt on several companies through debt repurchases, debt-for-debt exchanges and extending senior debt maturities, Schwarzman said.
Schwarzman's letter detailed that only 7 percent of the debt in Blackstone's fifth buyout fund matures before 2013.
Schwarzman said Blackstone was open to investing in the Middle East and sees the firm opening an office somewhere in the region. He declined to specify where.
What historically has been the case is that there's been enormous financial resources in this area and... the investment opportunities have typically not outstripped the resources of the family groups and the institutions in the region -- so it's not been a robust area for conventional private equity.
(Editing by John Stonestreet and Dan Lalor)