First Republic Bank
will be coming out of the
S&P 500
as a result of its seizure by regulators and that could provide an opening for the addition of
Blackstone
to the index.
First Republic (FRC), whose stock has been halted, was seized by federal regulators and the bulk of its assets were sold to
JPMorgan Chase
(JPM). In a note to clients this morning, S&P DJ Indices said that First Republic “is no longer eligible for inclusion in S&P DJ Indices. It is currently in a trading halt on NYSE. The index removal date will be announced at 5:15 p.m. through the normal channels.”
The new S&P 500 member could be Blackstone, which, with a market value of $110 billion, is the largest company that isn’t now in the S&P 500. That’s probably due to its ownership structure, which effectively gives control to CEO Steve Schwarzman. Recently, though, S&P Dow Jones Indices recently relaxed its criteria for inclusion in the S&P 500 index and will allow companies with dual-class stocks. While Blackstone doesn’t have two classes of stock, the new rules appear to have created the opening it needs to potentially join the index when the First Republic comes out or at a later date. Both First Republic and Blackstone are financial companies, which would allow S&P DJ Indices to more easily make the swap.
Blackstone shares are jumping Monday, and possible S&P 500 inclusion may be why. The stock is up 1.3% at $90.46 in early trading Monday. The stock has gotten a lift since S&P DJ Indices announced the rule change on April 17 on expectations that it will be added to the S&P 500.
Write to Andrew Bary at [email protected]
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