All Eyes Turn to Blackstone as Peers Lay Out Succession Plans
(Bloomberg) -- Many of the giant alternative asset managers in the U.S. have unveiled plans to transfer leadership to a younger generation. Many, that is, except for the biggest.
Blackstone Group LP has yet to publicly name a successor to 70-year-old co-founder and Chief Executive Officer Steve Schwarzman. The silence stands out after Carlyle Group LP’s announcement Wednesday that its founders will hand the firm to a set of younger executives. Carlyle joins a host of alternative-asset managers -- KKR & Co., Apollo Global Management LLC and TPG -- in bolstering their C-suites with fresh faces in recent years.
“It asks the obvious question of Blackstone, because they’re the last man standing” when it comes to being explicit about succession planning, said Paul Schaye, managing partner of Chestnut Hill Partners, which helps private equity firms evaluate transactions.
Blackstone President Tony James, 66, said during an earnings call in July that the New York-based firm has transition plans prepared. Disclosed details, however, remain sparse.
“We have really well-thought-out, carefully planned succession plans in all of our businesses, from the very top of the firm right on down,” James said. Blackstone in 2007 was one of the first among peers to name a non-founder as president, giving the title to James. In an emailed statement Wednesday, Schwarzman added that there are “long-term succession plans throughout our organization.”
Private equity firms are in the midst of an active fundraising cycle, replenishing their coffers with near-record inflows. Investors who lock up their money for a decade are eager to know who will manage the capital throughout, often probing the asset managers about succession plans for aging founders.
“When these firms started, they were based on the personality at the top,” said Schaye. “Today these are no longer private equity firms -- they’re financial conglomerates. And it’s about all the players, not just the corner office.”
Schwarzman, who co-founded Blackstone in 1985, has no current plans to vacate the CEO role, a person familiar with the matter said. That’s increasingly rare among firms that also started 30 to 40 years ago by founders now into their 60s and 70s.
Carlyle announced that co-founders David Rubenstein, 68, and Bill Conway will become co-executive chairmen, ceding their longstanding roles as co-CEOs to Glenn Youngkin, 50, and Kewsong Lee, 52. Dan D’Aniello, the third founder, will become chairman emeritus and remain on Carlyle’s board.
For Blackstone, the guessing game continues. Here are some contenders for the top job:
Gray, 47, heads Blackstone’s largest business unit by assets: real estate. He joined the firm out of college in 1992 and signed on to help expand into property deals. The Chicago native and father of four joined Blackstone’s board in 2012 and, in a rare moment revealing future management plans, Schwarzman in 2015 said Gray was “part of our succession plan.” Gray led Blackstone’s $5.6 billion purchase of Hilton Worldwide Holdings Inc., which became the most profitable private equity deal ever.
Baratta, 46, leads Blackstone’s global private equity business, the longstanding deal powerhouse that put the firm on the map. He joined in 1998 and moved to London to help build Blackstone’s European buyout presence, striking successful deals for Merlin Entertainments Plc and others. He returned to New York in 2012 with the private equity division’s top job.
A former top executive at General Electric Co. and Nielsen Holdings Plc, Calhoun joined Blackstone in 2014 with an expertise in operations. He leads the firm’s private equity portfolio operations team, a unit that’s become all the more important as buyout dealmakers look to functional improvements at companies while relying less on leverage and economic growth to juice returns.
Chae, Blackstone’s chief financial officer, joined in 1997 from Carlyle. Since then, he’s worked on Blackstone’s investments in Nielsen, Michaels Stores Inc., Weather Channel Cos. and Hilton. His roles have included overseeing media and telecom buyouts, helping manage investments in the firm’s tactical opportunities fund, heading private equity in Asia-Pacific and helping structure the 2015 spinoff of Blackstone’s merger advisory business.
Blitzer, like Gray, joined Blackstone straight out of college. He arrived in 1991 and has held a variety of roles, including building the European private equity business with Baratta. The father of five, who’s often referred to as “Blitz,” returned to the U.S. to pioneer an opportunistic investing business known at the firm as tactical opportunities, which has grown to manage $22 billion after about five years.
Peter Grauer, chairman of Bloomberg LP, is a non-executive director at Blackstone.
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