Blackstone Rocks Wall Street

Updated from March 16

Private equity is going public -- and with a vengeance.

Just a month after the pathbreaking Fortress(FIG) initial public offering, Friday's chatter had Steve Schwarzman's Blackstone Group testing the IPO waters. On Saturday, The Wall Street Journal, citing people familiar with the matter, reported Blackstone is in the advanced stages of planning an IPO for about 10% of its management company.

A spokeswoman at Blackstone declined to comment Friday, but the timing is certainly striking. Just two weeks ago at the Super Return private equity conference in Frankfurt, Schwarzman decried the notion of an IPO.

"To divert yourself like that and then take on that cost, is really not worth it," he said during a panel discussion. "I think the public markets are overrated."

Overrated or not, the public markets can offer firms such as Blackstone -- as well as rivals such as Kohlberg Kravis Roberts and Apollo -- a way to cash in some of the big gains they've made in recent years. The market and economy are healthy right now, though worries persist about a possible recession and possible ripple effects from the subprime lending meltdown.

"It's not really an IPO as much as it's an exit strategy," says David Menlow, founder and CEO of Millburn N.J.-based IPO Financial Network, which tracks IPOs. "This is a way to say we'll get a higher valuation than if we were private."

Steve Kaplan, a University of Chicago professor of finance and entrepreneurship, believes that a deal by a private equity firm might suggest that the markets are at their peak.