India, anchor to Blackstone’s Asia strategy: President Jonathan Gray

Private equity investments in India have given the highest returns to Blackstone Inc, which is firmly committed to the country and means to keep investing and “building businesses” as India is central to its Asia strategy, President and Chief Operating Officer of the global asset manager, Jonathan Gray, said on Tuesday.

“The folks at Blackstone think a lot of India,” Gray said at a media interaction in Mumbai. With India accounting for roughly half of its Asia exposure at $50 billion, Blackstone’s view on the country is bullish in the long term. “We believe growth here is going to be the highest among comparable economies,” Gray said.

Blackstone’s portfolio in India includes PE investments in companies where it sees growth opportunities, while it also has a large real estate exposure, being the largest foreign owner of office assets in the country.

High investor interest

“India is the anchor of our Asia strategy” Gray said, adding, “we want to do bigger things.” India is second only to the UK in terms of Blackstone’s exposure outside the US.

Investments by Blackstone in the country were subdued in 2022, largely due to the apprehensions of a recession in the US and Europe, and due to a slowdown in investor funding. The alternative asset manager raised $226 billion overall from investors and fell just short of achieving its stated intent of $1 trillion of assets under management at the end of the year. It was attributed to a weakening in fundraising.

Gray said the investor interest in India was very high and this was fueling its own investments in the region. While valuations would be a little high in India compared to countries such as the US, he said the opportunity-set in India looked better than the pricing levels due to the underlying growth.

Gray, however, ruled out launching an India-specialised fund currently, saying that a sub-fund (as part of a broader Asia fund) would make sense only if India were larger. Blackstone’s investments into India are now channeled through funds that are either Asia-focused or some other broad-based fund. “Right now, I don’t see a dedicated fund for India,” he said.

The alternative asset manager raised $226 billion overall from investors and fell just short of achieving its stated intent of $1 trillion of assets under management at the end of 2022 | Photo Credit: JEENAH MOON

Sector-specific views

Infrastructure is not a sector where Blackstone has investments in India and Gray said if it at all the company were to look at potential investments in this segment it would be in energy infrastructure, especially green energy.

Another area where Blackstone is hesitant about entering is stressed assets and those undergoing bankruptcy proceedings. He said bankruptcy laws in the country and the entire process needed more clarity with firmer timelines before they could think of serious investments. “It would not be a major area of focus for us,” he said.

With respect to the software sector, Gray said in the immediate term, the sector might be muted with global tech spending on the cautious side, but it would pick up soon. He said indications from central banks such as the US Federal Reserve and the European Central Bank was that inflation was under control and the rate hike cycle would soon slow down. But interest rates would still stay at elevated levels, he said.

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