* Potential for conflicts hampered growth
* Paul Taubman to play big role
* Tax-free spin-off expected next year
Blackstone, whose primary business involves buying and selling companies, faced restrictions on the use of its advisory arm. It now intends to sell its stake in the new company over time, one person familiar with the matter said.
“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,” Blackstone Chief Executive Stephen Schwarzman said in a statement.
Following a tax-free spin-off that is expected in 2015, Blackstone’s current shareholders will own 65 percent of the new publicly listed company. Taubman and Blackstone’s advisory employees will own the rest.
Blackstone’s advisory businesses being spun out account for a tiny fraction of the New York firm’s earnings, generating about $185 million of revenue for the six months to the end of June. Blackstone had total revenue of $3.7 billion in the same period.
Taubman, who left Morgan Stanley in 2012, has been behind some of the biggest deals of the past few years, advising Verizon Communications Inc on its $130 billion takeover of its wireless joint venture with the UK’s Vodafone Group Plc, and Comcast Corp on its agreed $42 billion takeover of Time Warner Cable Inc.
Simpson Thacher & Bartlett LLP is advising Blackstone and Weil, Gotshal & Manges LLP is advising Taubman’s firm, PJT Partners, on the transaction.
Greg Roumeliotis is a reporter for Reuters news service.