00:00 Here's your Forbes daily briefing for Tuesday, February 6th.
00:05 Today on Forbes, Blackstone's $80 trillion opportunity.
00:11 It's September 2023.
00:14 Blackstone's billionaire founder and CEO, Steve Schwarzman, is in Paris mingling with
00:18 his senior European staff at a party to christen the private equity giant's new 26,000 square
00:24 foot office.
00:25 Beside him, in the courtyard of the elegant 18th century building, is Gerard Herrera,
00:31 chairman of Blackstone France and former French ambassador to the United Kingdom.
00:36 That morning, Schwarzman gave the keynote address to a gathering of more than 2,000
00:40 of Europe's biggest investors and family offices at International Private Equity Market's
00:45 annual conference.
00:46 It has been a European whirlwind for Schwarzman.
00:50 The day prior, the 76-year-old was in Frankfurt, Germany, opening a 14,000 square foot Blackstone
00:55 office on the top floor of a glass and steel skyscraper in the heart of the city's financial
01:00 district.
01:03 Blackstone now has 17 offices around the world and has more than doubled its overseas headcount
01:07 in just five years.
01:09 As the firm expands globally, Blackstone president and COO Jonathan Gray is on the road constantly,
01:17 often in New York only for the weekly Monday all-hands meeting.
01:20 While Schwarzman was in Paris, Gray was 3,600 miles away, en route to Toronto, where Blackstone
01:26 is opening its first office in Canada.
01:29 That trip came just before his visit to Blackstone Singapore, which expects to double its headcount
01:34 to 200 within two years.
01:37 Even when Gray is in New York, he's kind of traveling, typically spending the hours
01:40 around dawn talking to lieutenants in Mumbai as he walks to headquarters.
01:46 India is important.
01:48 Blackstone owns 40 companies there and is the country's largest commercial real estate
01:52 operator.
01:53 The subcontinent has been the private equity firm's top performing market.
01:57 Last May, it took India's largest mall operator, Nexus, public through a $1.9 billion real
02:03 estate investment trust.
02:06 Blackstone is mounting this international blitzkrieg because that's where the money
02:09 is.
02:10 U.S. institutional investors, who have already allocated 25% and more to private equity funds,
02:15 aren't looking to invest much more in the sector.
02:18 But globally, investment in private assets is in its infancy.
02:23 It's a huge opportunity.
02:24 According to Capital IQ, privately held companies with more than $250 million in revenue account
02:30 for 86% of investable businesses.
02:34 Moreover, Blackstone estimates there is $80 trillion of individual investor wealth globally,
02:39 much of it idling in European enclaves like Zurich and Paris, and in Asia, from Tokyo
02:44 to Seoul to Mumbai.
02:46 If you get Schwarzman, whose net worth currently hovers around $38 billion, talking about the
02:52 business he created in 1985, you'll soon realize that the old leveraged buyout game that he
02:57 helped perfect is going through a revolution.
03:01 In the United States, traditional private equity, that is, raising money from large
03:05 institutions to acquire stodgy companies, taking on mounds of debt, and then slashing
03:10 costs and rejiggering the capital structure for quick profits, that's dying, or at best,
03:15 a slow growth business.
03:17 There are more than 2,000 private equity firms today, up from fewer than 500 a decade ago.
03:24 The new game, dubbed "alternatives," is all about growth.
03:28 Firms buy companies in areas like logistics, infrastructure, life sciences, and e-commerce,
03:34 and make them bigger, not smaller.
03:37 Unlike old-school buyouts in which fund lifespans were limited to 10 or 12 years, contributing
03:41 to a slash-and-churn culture, the hottest funding source in the business is now something
03:46 called "perpetuals," buyout funds that are often individual-investor friendly and have
03:52 no end date.
03:54 Like Warren Buffett's Berkshire Hathaway, Blackstone's new shtick is to buy and hold,
03:59 and the new funds enforce this by limiting redemptions.
04:02 Up from almost nothing a decade ago, these novel perpetual funds now account for 38%
04:08 of Blackstone's $1 trillion in assets under management, and even more of its fee income.
04:14 Gray invented perpetuals at Blackstone, and the 54-year-old is leading the charge to remake
04:18 the firm into the world's biggest full-service capital provider, directly challenging old-school
04:23 mega-money centers like J.P. Morgan, BNP Paribas, and HSBC.
04:31 For full coverage, check out Sergei Klebnikov and Matt Shifrin's piece on Forbes.com.
04:37 This is Kieran Meadows from Forbes.
04:40 Thanks for tuning in.
04:41 [MUSIC PLAYING]
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