The last days of Rome?

Blackstone's unveiling of its finances this week has given us a tantalising glimpse at the workings of private equity groups. It's like suddenly having access to Mr Creosote's fridge: open it up and you're not surprised to find it contains a hell of a lot of cakes.

Last Updated: 31 Aug 2010
The figures are staggering. The buy-out group, which counts Madame Tussauds and Center Parcs among its interests, now manages funds of $88bn, having started out 22 years ago with a measly $400,000. With its initial public offering expected later this month, its co-founders stand to reap as much as $2.6bn - 81-year-old Peter Peterson will get $1.88bn of that. (The tantalising question of how on earth an 81-year-old will manage to spend close to $2bn has been answered with the rather mundane announcement that he'll be giving most of it to charity).

Blackstone's chief exec Stephen Schwarzman has done pretty well too. Private equity's apologists like to ham up the fact that he ‘only' earnt $398m last year. Although that's seven times the earnings of the head of Goldman Sachs, we're told this is still pennies compared to the takings of the hedge fund bosses. But before we break out the violins, we should mention he's going to get some $450m from the IPO and still retain a stake worth a whopping $7.7bn.

It's no surprise that private equity groups have always doggedly guarded their privacy. Now the public knows that Schwarzman and Peterson billed the company $158,500 last year for the use of a private helicopter. This begs the question - how long can such excesses continue? Are we soon to witness the last days of Rome? As the forces of government, trade union and the public mass against them, the private equity fat-cats may have to stop gorging on grapes for a second and enter a brutal conflagration.

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