Big Debut for Blackstone

The private-equity IPO rises sharply in its NYSE debut.
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Updated from noon.

Blackstone Group

(BX) - Get Report

burst from the gate in its huge IPO Friday.

Shares opened at $36.45 after pricing late Thursday at $31. Appetite from mom-and-pop players and international investors is driving the heavy demand, along with the usual suspects on Wall Street. Shares closed up $4.15, or 12%, at $35.15.

Richard Bove, analyst at Punk Ziegel, says many of the early buyers have already made implicit agreements to buy shares to keep it afloat in aftermarket trading. "That is what will drive up the stock in the near term," he says.

The offering is making co-founders gobs of money. CEO Stephen Schwarzman could see some $7.8 billion from the offering, including his retained 23% stake, and co-founder Pete Peterson could pull down $1.9 billion on his 4% stake.

Blackstone's outsized bucks have not been overlooked on Capitol Hill. Congress has launched a series of bills and proposals that would look to eat into the investment shop's profits and potentially nix future deals.

The Senate Finance Committee has placed a bull's-eye on private equity that would see the such companies taxed at a higher rate of more than 35% -- compared to the 17% rate that hedge fund

Fortress

(FIG)

and Blackstone currently enjoy.

Sens. Christopher J. Dodd (D., Conn.) and Richard Shelby (R., Ala.) wrote

Securities and Exchange Commission

Chairman Christopher Cox to ask for more information on the so-called Blackstone tax hike.

But all the pooh-poohing on the Hill did not prevent Blackstone from going forward. Now, private-equity firm KKR is shrugging off the tax talk with plans of its own public offering in the wings.

Blackstone's shares started trading Friday morning under the ticker BX. The IPO is expected to draw the most frenetic action since

Nymex

(NMX)

shares soared 125% in their first day of trading back in November.