The Blackstone Group recently announced its intentions to go public in what is quickly becoming a private equity rush to the public markets. Blackstone, the largest private equity firm in the world, is planning to offer 10% of its shares to the public for $4 billion in a move that is sure to spark interest on Wall Street. Many investors like the idea of a Blackstone IPO since the company has proven to be a cash machine. Since 1987 the firm has averaged an impressive 23% annualized return with its real estate division returning closer to 29%! Meanwhile, Blackstone's assets have grown from $14 billion to $78 billion in less than six years - that is, they have multiplied their assets more than five times in six years. These are impressive numbers that have many investors eager to put money in the private equity giant.

Some investors are speculating that this move indicates that the market may be overvalued. After all, if the market wouldn't assign a high enough premium to their shares why would they IPO? What concerns investors is the ease in which private equity and hedge funds are able to raise cash. Investors who know the market is fully valued are apparently willing to give their money to these firms that in turn feed the M&A mania. Moreover, is there a problem with the credit markets? The recent subprime fiasco combined with the fact that the credit markets have grown five times as fast as the GDP for the entire 21st century so far is certainly cause for hesitation. And what happens when the debt markets grow less desirable and equity is required to get deals done? It's simple, returns will fall. This makes the idea of investing in Blackstone less desirable. However, at least in the short-term, we can be sure that there will be plenty of interest in the IPO. Whether this is a sign of something more remains to be seen. Combined, these factors make Blackstone a company worth watching!