Securities and Exchange Commission chairman Christopher Cox on Wednesday was floating in mail related to Blackstone Group LP's pending IPO from senators on both sides of the aisle.
Sen. James Webb, D-Va., sent a letter Wednesday night to the SEC demanding a delay of the IPO, pending a national security review by the Committee on Foreign Investment in the United States concerning a $3 billion Chinese government investment in the buyout firm. A delay would jeopardize the expected Friday offering.
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Webb wasn't the only senator mailing Cox. Two key senators — including a presidential hopeful — not only sent Cox a letter, but they also sent one to Treasury Secretary Henry Paulson requesting their assessment of recently introduced legislation that would increase taxes on publicly traded buyout shops and hedge funds. Senate Banking Committee Chairman Christopher Dodd, D-Conn. — a presidential long-shot — and Richard Shelby, R-Ala., sent the letter asking the agencies to review the impact of the bill on the capital markets.
Dodd's request, which really is not shocking considering the concentration of hedge funds in Greenwich, Stamford and other parts of southern Connecticut, follows the introduction of legislation last week by Senate Finance Committee Chairman Max Baucus, D-Mont., and ranking Republican committee member Sen. Charles Grassley, R-Iowa, that would increase taxes on these publicly traded partnerships. Grassley and Baucus sent a similar letter to Paulson on the subject.
While the Baucus-Grassley bill works its way through the Senate, Rep. Peter Welch, D-Vt., introduced a similar bill in the House on Wednesday. Both bills would force Blackstone to pay taxes at the 35% corporate rate rather than the lower 15% capital gains rate usually afforded to a limited partnership. However, the House version does not provide Blackstone a five-year grace period before the corporate rate is applied. —Ron Orol and Matthew Wurtzel
See story from The Washington Post
See story from Reuters
See earlier story about taxes from TheDeal.com
See earlier story about Chinese investment from TheDeal.com
See earlier story about filing from TheDeal.com
Comments
I think if anyone looks at performance of FIG after the announcement about tax law changes they will get a good indication of what might happen to Blackstone.
The only strange thing about this whole thing is timing... few days/week before IPO.