With the restraints of its former partnership structure now removed, Blackstone Group Inc. believes its stock will continue to rerate higher over time, reflecting the trajectory of its business, Chairman and CEO Stephen Schwarzman said on the alternative asset manager's third-quarter earnings call.
Blackstone completed its conversion to a C-corp on July 1, following Ares Management Corp. and KKR & Co., its listed peers. Apollo Global Management Inc. and Carlyle Group LP have also made the decision to switch.
Partnership structures do not pay taxes themselves but distribute profits to shareholders who are required to pay taxes. These tax implications can restrict some investors from owning shares in partnerships. The C-corp model does require companies to pay taxes but is less restrictive for investors.
Schwarzman said Blackstone's shareholders are "increasingly recognizing Blackstone as the enduring institution it is," adding that while the firm was focused on building a world-class company, it also did a great job creating a security that was "simply too hard to own."
"We finally fixed that with our corporate conversion in July," he said.
Blackstone has a market cap of nearly $60 billion and has also been added to several market indices, allowing index funds to own its stock for the first time, Schwarzman said.