The Blackstone Group L.P. (NYSE:BX)’s management announced yesterday that it would lay off its financial advisory services, reorganization and structuring of its advisory services along with its Park Hill Fund businesses and combine it with Paul J. Taubman’s PJT Partners. The firm is trying to focus over its alternative asset management business by spinning off the slow-growing advisory business.
The advisory division of Blackstone did some excellent job in the past and dealt with major companies including PepsiCo, Inc. (NYSE:PEP), The Procter & Gamble Company (NYSE:PG), and American International Group Inc (NYSE:AIG). However, the division has missed some of the major business deals in the past few years and was quite unsuccessful in the Lehman Brothers Holding Inc’s deal.
The CEO and founder of the Blackstone Group L.P. (NYSE:BX), Stephen A. Schwarzman, said,
“Blackstone began as an advisory firm nearly 30 years ago. The decision to spin off these businesses is possible because of our success in growing them over the past 30 years. As the largest alternative asset manager in the world, and with our investing areas considerably broader and larger than even a few years ago, we have not been free to aggressively grow our advisory businesses further out of concern for potential conflicts. The separation of our investing and advisory areas will create new growth opportunities for both businesses.”
On the other hand, Taubman is quite interested with the merger and said,
“This is a unique opportunity to combine the legacy, scale and scope of a well-established business while capturing the entrepreneurial energy of a new firm to better serve clients. Further, by eliminating the potential conflicts that existed as part of the world’s largest alternative asset manager, these three businesses will now be positioned for significant growth.”
When asked about the responsibilities and working area of the combined entity, Taubman said,
“The new enterprise will include the leading restructuring franchise on the Street, a market-leading fund placement business and a strategically important advisory practice.”
The merged firm will be owned together by the Blackstone Group L.P. (NYSE:BX)’s shareholders (65%) and Taubman, the Blackstone unit and PJT employees.
This article has been written by Prakash Pandey and edited by Serkan Unal.