[SEOUL G20 BUSINESS SUMMIT/CEO STORY]In Private Equity Wars, Blackstone Hates to Lose

He constantly studies his competitors to gain an edge. He is the highest-paid chief executive in the United States with compensation worth US$702.4 million in 2008. He also donated US$100 million to expand the New York Public Library. He is Stephen Schwarzman, 63, chief executive of the Blackstone Group, a private equity firm.

If power brokers who profited from junk bonds ruled Wall Street in the 1980s, private equity funds lead the show now. Private equity firms invest astronomical amounts to buy out companies across borders and industry sectors, restructure them and sell them on. Blackstone is the world’s biggest private equity firm.

As of April, Blackstone had US$100 billion under management. The firm owes its number one position to its CEO’s tenacity; He hates to lose.

Schwarzman began his career at Lehman Brothers after graduating from Yale and Harvard Business School. He surged up the corporate ladder, becoming head of the M&A team by the time he was 31. He founded Blackstone with partner Peter G. Peterson in 1985. Blackstone started out as an advisory firm, but Schwarzman quickly launched private equity funds and attracted US$830 million, an unheard of amount at the time. Since 1987, Blackstone has bought 142 assets in deals worth a total of US$289 billion through private equity.

“Lunch? You must be kidding!” he says. “We don’t have time for lunch.” He is like a bulldozer when he works. He never gives up. A prime example is when Blackstone acquired German chemical company Celanese AG in 2004. Celanese took its time to raise its price. Schwarzman waited. Blackstone eventually resold it at a six-fold profit.

Schwarzman caused a ruckus recently by comparing President Obama to Hitler. When the administration announced that it would increase taxes on private equity firms, he compared it to “when Hitler invaded Poland in 1939.” It remains to be seen whether his latest war will be a winning one.

By Ha Im-sook
artemes@donga.com