How a titan of finance missed out on a deal in an '$8 billion mistake'

Three decades ago, a former bond trader named Michael Bloomberg wanted the founder of a fast-growing private-equity firm to back his financial-data startup.

But a meeting between the two men - who went on to become two of the richest men in New York City - ended without a deal.

"It makes me sad every time I see him," Stephen Schwarzman, cofounder and chief executive of Blackstone, told Business Insider.

"That was probably an $8 billion mistake," he said.

The reason? Bloomberg, who at the time was ramping up his media and data startup and looking for outside capital, didn't want a partner who would sell. Ever. Steve Fenster, a corporate-restructuring whiz who sat on the board of Bloomberg LP, and was a friend to Schwarzman, helped broker the introduction.

'Legally prohibited'

It was very early on in Blackstone's existence. Private-equity firms, in order to secure capital from outside investors, typically aim to give that cash back to investors, with additional returns, in seven to 10 years.

"I told him, 'We'd love to do this, because you're terrific, but I am legally prohibited,'" Schwarzman recalled.

"Mike wanted to have a partner. His definition of a partner was someone who never sold ... Getting into a situation there's no way out of, was not permissible."

It's a deal that might have rewritten Forbes' list of richest Americans, on which the former mayor of New York City ranks eighth and Schwarzman most recently placed 38th.

Bloomberg LP declined comment when reached by Business Insider.