Blackstone Group, the world's biggest private equity firm, is trying to mend relations with New York City's public pension funds after strategist Byron Wien said retiree benefits were “too generous.”
Blackstone President Tony James met Tuesday with representatives from one of the five plans that have $750 million committed to the firm, then sent a letter aimed at clarifying Mr. Wien's comments to the head of the New York City Employees' Retirement System. The pension plans had asked Blackstone to retract Mr. Wien's comments, made in January, according to two people familiar with the talks.
“We heard that the trustees had some concerns and we requested a meeting to clarify our position,” said Peter Rose, a Blackstone spokesman. “We regularly and frequently meet with our limited partners.”
The meeting came at the request of Mr. James, who plans to speak with representatives of the New York City Police Pension Fund next week. As of Jan. 31, the city's pension funds — the New York City Employees' Retirement System, Teachers' Retirement System, Police Pension Fund, Fire Department Pension Fund and the Board of Education Retirement System — had a combined $98 billion in assets under management.
Mr. Wien, the former Pequot Capital Management and Morgan Stanley strategist known for his annual “Ten Surprises” forecast, became vice chairman of Blackstone's advisory group in August as the firm moved to expand its businesses outside private equity.
“The retirement benefits for state workers, really not only in New York, California and New Jersey but throughout the country, are very generous, too generous,” Mr. Wien said in response to a question about U.S. state budget deficits during a Jan. 5 presentation of his forecast, according to a transcript. “We literally can't afford the benefits we have given our retirees in state and local governments and we have to change that.”
Mr. James, in his letter to Bud Larson, chairman of the city employees' system, noted that public pensions have been the largest investors in Blackstone since its creation in 1985.
“These are trying fiscal times for all levels of state and local governments,” Mr. James wrote in the letter, a copy of which was obtained by Bloomberg News. “But the benefits earned by state and local employees who have put in years of dedicated service should not be singled out and made vulnerable because of this crisis.”
Mr. Wien analyzes economic, social and political trends across markets for Blackstone's clients, including those in the private equity funds, Mr. Rose said.