Blackstone: $5 billion limit for LBO bank financing

By Megan Davies

NEW YORK (Reuters) - Private equity firm Blackstone Group LP's (BX.N: Quote, Profile, Research) chief operating officer said on Tuesday that the limit on bank financing for leveraged buyouts was about $5 billion.

But COO Tony James said there were multiple opportunities to invest despite the market turmoil and the limit on financing, adding the company has had a very active 12 months, investing $8.7 billion in 27 deals since the credit meltdown.

"People say you can't do leveraged buyouts," said James. "That's not correct. We are getting bank financing for LBOs (leveraged buyouts), but we're not getting bank financing for deals over about $5 billion in size."

He said the current volatile market conditions were ideal times for Blackstone to invest.

"One could be forgiven for thinking this is a hostile environment for Blackstone," said James, speaking at a Lehman Brothers conference that was webcast. "I don't agree at all. I think it's a fantastic environment. Turmoil, discontinuity in the market and scarce capital are absolutely ideal forces for our businesses."

Blackstone has taken part in some of the largest leveraged buyouts ever, such as the $23 billion purchase of Equity Office Properties Trust, but has also done numerous smaller buyouts.

"The public perception is that Blackstone just does large buyouts, but it's not true," said James.

The credit crunch last summer froze the debt markets for large leveraged buyouts, and private equity firms have instead been focusing on smaller deals, minority investments, and investing in debt or looking overseas.