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 James, 63, has not disclosed when or whether he will step down from
being president and chief operating officer at the firm. The sources
stressed that senior Blackstone executives see him as fully
committed to his current role and do not expect his resignation in
the coming months.
Yet James has been quietly preparing the ground to step down at some
point, grooming leaders at each of Blackstone's major divisions as
possible successors, the sources said. The move would be the biggest
change in Blackstone's leadership since co-founder and Chief
Executive Stephen Schwarzman, 67, hired James in 2002.
Reuters has learned that James was offered the job of commerce
secretary when President Barack Obama reshuffled his cabinet two
years ago. He turned down the previously undisclosed offer because
he wanted the post of Treasury secretary or national economic
adviser, one of the sources who was briefed about the offer said.
The White House did not immediately respond to a request for
comment.
A Democrat, James wants to become more involved in U.S. politics and
he is a backer of Hillary Clinton, who is widely expected to seek to
be elected U.S. President in 2016, though she has yet to declare
whether she will run.
However, James sees his chances of a cabinet position in any Clinton
administration as slim because he has not cultivated his ties with
her as much as he did with Obama, the sources said. He has no plans
to run for office himself, they added.
A Clinton spokesman offered no immediate comment. A Blackstone
spokesman declined to comment.
James' mulling of his next step sheds new light on succession
planning at Blackstone, which has almost $300 billion in assets
under management, spanning real estate, private equity, alternative
credit and hedge fund investments.
As chief operating officer, James oversees the day-to-day running of
the New York-based firm. His successor is expected to effectively
run Blackstone and eventually succeed Schwarzman, who has already
delegated many of the firm’s operational decisions to James.
POSSIBLE SUCCESSORS
James’ most likely successor is seen by Blackstone investment staff
to be Jonathan Gray, the global head of Blackstone's real estate
team. But the sources stressed head of private equity Joseph Baratta,
head of credit investments Bennett Goodman, and head of tactical
opportunities David Blitzer are also in contention. Blackstone
declined to comment on their behalf.
It would be controversial for any Democrat President to appoint
someone who has been so integral to Wall Street’s buyout industry to
the most senior finance job. The private equity industry, which is
epitomized by Blackstone, has often come under fire for the low tax
rates on profits that its partners like James pay under the current
tax system. Buyout firms are also often criticized for cost cutting,
including making layoffs, at some companies they take over.
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Friends and former colleagues of James said that it would be a waste
for any U.S. administration to ignore his talent given his track
record of developing successful businesses and his understanding of
the financial system.
“Tony James would succeed in anything you put in front of him,” said
Ken Moelis, CEO of investment bank Moelis & Co. Moelis was a former
colleague of James at Donaldson, Lufkin & Jenrette and has kept in
touch with him.
Other interests James will pursue once he steps down include
charitable work and environmental causes, one of the sources said.
He sits on the board of trustees of New York's Metropolitan Museum
of Art and on the board of Costco Wholesale Corp, and would consider
other corporate directorships, that person added.
James is likely to continue to be involved with Blackstone in some
capacity once he steps down, the sources said. James has a net worth
of $1.7 billion, according to Forbes. More than $1.5 billion of that
is the value of his Blackstone shares.
He has been one of Obama's most loyal backers on Wall Street,
hosting fundraisers for him at his home and providing a
counterweight to Schwarzman's Republican allegiances.
James has met Clinton less than ten times, one of the sources said.
James meets occasionally with Thomas Nides, a Morgan Stanley veteran
who served Clinton in the State Department between 2011 and 2013 as
deputy secretary and has historically been one of her closest
connections with Wall Street. James worked with Nides when they were
both at Credit Suisse Group AG. A Morgan Stanley spokewoman conveyed
a request for comment to Nides, but offered no immediate comment.
Even if James does not get an official government role, he will
likely continue to try to affect policy through think tanks such as
the Center for American Progress, on whose board he sits, and
through his connections with political insiders, the sources said.
(Editing by Martin Howell)
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