Blackstone's founders built its name from German and Greek versions of their own
Stephen Schwarzman and Peter Peterson named their 1985 firm with a bilingual pun: Schwarz is German for black, and Peter comes from the Greek word for stone. Starting with $400,000 in seed money, Blackstone grew into the world's largest alternative investment firm, with $1.2 trillion under management by 2025.
The pair had worked together at Lehman Brothers, where Schwarzman ran global mergers and acquisitions, and Blackstone began as a small advisory shop. An early payday was a $3.5 million fee for advising on the 1987 merger of E. F. Hutton with Shearson Lehman Brothers. They always wanted to buy companies too, but raising a first buyout fund was hard because neither had ever led one. They finally closed it just after the Black Monday crash of October 1987, backed by Prudential, the Japanese broker Nikko Securities and the General Motors pension fund. A year later Nikko paid $100 million for a fifth of the firm.
Schwarzman's biggest regret came from a side venture. In 1987 Blackstone went into partnership with Larry Fink and Ralph Schlosstein, former mortgage-bond chiefs, to build a fixed-income manager that became BlackRock. Blackstone sold its stake to PNC in 1995 for $240 million. Over the next two decades PNC booked $12 billion in pretax revenue and gains from BlackRock, and Schwarzman called the sale the worst business decision of his life.
Other bets were odder or luckier. Blackstone's real estate arm bought the Watergate complex in Washington for $39 million in 1998 and sold it in 2004. Rural cable systems and a Rocky Mountain mobile operator earned its funds about $1.5 billion in profit. In 2002 it raised a $6.45 billion fund, then the largest ever for private equity, and used the firepower during a recession to buy TRW Automotive for $4.7 billion. It joined six other firms in the $11.3 billion SunGard buyout of 2005, a crowded deal some investors disliked.
The peak of the boom brought the $26 billion takeover of Hilton Hotels in 2007. That June, Blackstone went public itself, selling 12.3 percent for $4.13 billion in the largest American IPO since 2002.
Source: Blackstone Inc.
