Stephen Schwarzman: Blackstone's $10 Billion Man
Stephen Schwarzman, chairman of Blackstone Group, lands on this year’s World’s Billionaires list at #122 with a fortune of $10 billion. That’s the highest ranking he’s ever achieved, and it easily makes him the richest of the American private equity shop billionaires, who run the likes of KKR, Apollo Global and Carlyle Group.
What’s remarkable is how quickly Schwarzman has ascended. Yes, he’s more than doubled his net worth from four years ago. But he gained $2.3 billion of it in just the past six months since the Forbes 400, when he was worth $7.7 billion — primarily from the soaring value of Blackstone, the leveraged-buyout firm he founded with Peter Peterson in 1985 with just $400,000 on its balance sheet.
Blackstone stock has largely been in stasis since its public listing in June 2007 at $31 per unit. Its value dropped steadily following the IPO and units have since hovered in the teens following the stock market bottom in early 2009 following the financial crisis. But amid the recession, with the real estate market in shambles, Blackstone started snapping up distressed properties on the cheap across the globe, transforming its focus and its fortunes. Now, in the U.S., it’s one of the largest owners of single-family residences in the country, spending more than $7.5 billion in the past two years purchasing more than 40,000 properties that it manages as rentals.
The strategy is paying off. With $266 billion in assets under management — $80 billion in real estate — the company reported $6.6 billion sales and $2.9 billion net income in 2013, up sharply from the $4 billion sales and $830 million net income in 2012. Of the $4.7 billion in performance fees Blackstone generated in 2013, 70% came from its real estate segment. Its stock more than doubled during the year, in December eclipsing that $31 IPO price for the first time since 2007.
Like Schwarzman, Blackstone’s other billionaires have similarly prospered in the past year. Hamilton “Tony” James ($1.6 billion), president and COO of the company, returned to the billionaires list after a two-year hiatus. Jonathan Gray ($1.4 billion), the global head of real estate who has led the company’s property-driven transformation, debuts on the list for the first time. They’re considered the most likely candidates to replace Schwarzman when he retires. (Peter Peterson, net worth $1.7 billion, retired from Blackstone in 2008).
But if Schwarzman is enjoying presiding over his company’s resurgence, retirement plans could be on the back burner for a while.