Private-equity titan Blackstone has rejected a Securities and Exchange Commission request that the firm publicly disclose its performance, according to Bloomberg. The SEC’s 2008 request was rebuffed on grounds that the voluntary disclosure of private-firm financial data wasn’t representative or relevant to the fund’s operations.
“The individual rates of return have no direct impact on our financials and therefore we question the relevance to our investors,” said Blackstone CFO Laurence Tosi in a letter to the SEC last December. Peer Fortress Investment Group was also solicited by the SEC, but agreed to “augment [its] disclosure” in its annual report.
Both Blackstone and Fortress are private firms that began selling shares to the public in 2007. Their disclosure of returns is purely voluntary, as evidenced by the SEC not pushing Blackstone beyond their initial request.
Because private-equity funds earn their returns bypurchasing and then selling companies over a seven- to 10-yearperiod, annual performance figures can be misleading,particularly in the early life of the partnership, MarcBonavitacola, who analyzes and examines buyout funds for Boston-based SVG Advisers, told Bloomberg.
Analysts agree that private-equity funds operate on a longer timeline than do other public companies, and that a given financial statement therefore can be misleading. “I understand why Blackstone doesn’t want to [disclose],” said Jefferies & Co. analyst Daniel Fannon. “These are points in time and the private-equity funds have a much longer life.”