Blackstone Group is better known for striking multibillion-dollar leveraged buyouts than advising on others' deals, but its M&A unit, led by the continent-hopping John Studzinski, made a dramatic leap up the league table this quarter.
Propelled by its role advising bailed-out insurer American International Group, Blackstone ranked No. 9 for M&A advisory worldwide for the first quarter so far, when measured by value of deals, according to Thomson Reuters data.
The largest sale assignments on the AIG mission came to fruition this quarter, when in a space of just a week AIG struck deals to sell two major foreign life insurance businesses, one each to Prudential Plc and MetLife Inc, for some $51 billion.
That boosted Blackstone -- in 78th place this time a year ago -- into the top 10 for the first time. The data for the quarter, which is preliminary, runs to March 25 and compares with the same period in 2009.
Still, Blackstone has a long way to go before it becomes a serious rival to the large banks in terms of sheer volume of dealflow. Goldman Sachs, the No. 1 M&A adviser for the quarter, advised on eight times the number of deals Blackstone did in the period.
Studzinski stresses he doesn't focus on league tables, rather on getting interesting, important and lucrative projects. Still, he's pleased that efforts to hire bankers and win assignments are paying off.
"What I'm most proud of in terms of our advisory practice is that it is a very focused, international practice with some strong industry expertise," said Studzinski, who splits his time between Blackstone's London and New York offices, meaning frequent red-eye flights over the Atlantic, as well as to China and India.
Studzinski, who joined in 2006 from HSBC, where he was co-head of investment banking, expects international M&A to make up a bigger chunk of Blackstone's M&A fees going forward.
Where others have cut back M&A staff numbers, Blackstone has increased them. The advisory and restructuring business now has more than 120 professionals, up from 95 at the end of 2008, Studzinski said, and he's looking to selectively hire more.
While the AIG sales were the main driver of Blackstone's high position in the league table, it also advised on a clutch of smaller deals over the past few months.
It advised Nestle on its $3.7 billion acquisition of Kraft Foods' North American frozen pizza business and had an advisory role in the $350 million acquisition of Sunoco Inc's chemicals unit by Braskem, Latin America's largest petrochemical company.
It even advised a rival private equity firm, Bain Capital, on its acquisition of Dow Chemical's Styron unit.
Blackstone is unusual in being a private equity business with an M&A practice, and competes for assignments with both Wall Street banks and boutiques. Some smaller firms have bulked up by adding staff laid off by the banks during the financial meltdown.
"There have been a lot of boutiques and practices created in the last few years, and some of the strong ones have become stronger. Blackstone is one. There are a lot where the jury is still out and a lot which won't succeed," said Studzinski.
Blackstone stresses it avoids conflicts of interest between its private equity business and advisory unit by having strict rules and Chinese walls over assignments
According to Blackstone's latest earnings release, fees earned from the corporate and M&A advisory business increased 7 percent to $164 million for 2009.
"Our focus is on the sectors in which we want to be a leading banker," Studzinski said, adding his focus includes areas such as technology, financial services, energy, metals and mining, chemicals and consumer. He's also putting more priorities on markets such as Germany and Australia.
High profile past deals Blackstone has worked on include advising Reuters on its 2007 takeover by Canadian publisher Thomson Corp, now Thomson Reuters Corp.
Generally, M&A dealflow fell off a cliff after the financial crisis but has been gradually recovering. Emerging market and energy-focused deals made up a growing proportion of this quarter's figures.
Studzinski said he's seeing a pick-up in dealflow and thinks overall M&A for 2010 could be up 20 percent to 25 percent in volume terms from last year.
"Last year our pipeline had around 50-60 active deals. This year that number's almost doubled," said Studzinski. "Some of that is (due to) Blackstone's international network and industry expertise and some is the market."
Blackstone has had an advisory business since it was founded in 1985 by former Lehman Brothers banker Steve Schwarzman and former Lehman head Pete Peterson.
It currently has an advisory presence in the United States, London, Paris, Beijing and Hong Kong.