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Blackstone C-corp conversion in full effect

The firm has been introducing itself to a new set of investors through an ‘extensive roadshow over several weeks’.

Blackstone has officially made its move to a C-corporation.

The switch in structure became effective July 1 following the firm’s announcement in April.

Blackstone is one of several large listed asset managers, including KKR, Apollo Global Management and Ares Management who have made the decision to switch from a complex partnership structure following the introduction of The Tax Cuts and Jobs Act of 2017, the biggest change to US tax policy in decades.

Following the announcement in April, Blackstone “embarked on an extensive roadshow over several weeks, with the goal of introducing or re-introducing, our firm to investors around the world,” chief financial officer Michael Chae said on the firm’s second quarter earnings call on Thursday.

“The schedule was exceptionally high quality, and included over 100 institutions, more than half of which were new to the alternatives sector and Blackstone.”

Chae added Blackstone stock has “reacted positively” since it announced the conversion.

The firm has now set its sights on several market indices for which it is newly eligible, including the S&P Total Market, MSCI, and CRISP. “We expect to be added to these in the fall,” Chae said.

The firm does not plan on offering voting rights to outside shareholders, which it would need to do to be eligible for the Russell 1000 Index.

Blackstone chief executive Stephen Schwarzman said he hopes the conversion will “make it significantly easier for both domestic and international investors to own our stock and should drive greater value for all our shareholders over time.”

The firm announced on Thursday that 7 million shares were purchased on the open market.

The firm’s private equity strategies group generated the lowest returns across all asset classes in the second quarter, returning a gross negative 2.6 percent return, as reported by sister title Private Equity International. Chae attributed the negative returns to market volatility in the fourth quarter of 2018 and expects the returns to bounce back given the two-quarter lag on reporting.