Schwarzman liked the idea. However, one of Blackstone's partners at the time warned him this was a bad investment. The partner told him after hearing what was going on that Edgcomb "was going to go bankrupt."
"I said 'Why is that?' He said they look like they're making money, 'but it's just inventory profits," Schwarzman recounts. "Steel goes up; steel goes down. When it's going up … they'll do really well. That's where we are now. When it goes down, it will all reverse and you won't be able to pay your principal in interest and it will go broke.
"In my infinite wisdom as a 37-year old, full-of-himself but half-scared person, I went with the first guy," Schwarzman said, noting that Blackstone lost all its equity in Edgcomb shortly after. "We had no process. It was our third investment," he said. "It was horrible. It was disastrous." One of Blackstone's clients then summoned Schwarzman and berated the now famous investor. "I was about to cry." After that, "I said: 'This will never happen again.'"
In hindsight, that dreadful experience served as a turning point for Blackstone and Schwarzman. Blackstone is now one of biggest private-equity investors in the world. The company manages more than $470 billion.
Trump? Rosneft?
Better question: What was TrumpAdvisor SteveSchwarzman’s role in TrumpRussia and the 2016StolenElection?🤔👇
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