Blackstone is the world’s largest investor in private equity (PE) and real estate with $545 billion in assets under management. Schwarzman said that private technology companies, often referred to as unicorns, have started seeing the disconnect in value ascribed to them by private and public market investors.
“In the US, we only have one major bubble going on in privately valued, venture-backed large companies,” he told
TOI in an interview. The comments come at a time when SoftBank-backed office space company WeWork, valued at $47 billion earlier this year, delayed its IPO even after reportedly less than halving its valuation.
Schwarzman did not directly comment on WeWork.
Schwarzman knows about spotting bubbles, with India giving him indicators of an upcoming global real estate correction in 2006, which he reveals in the book on his life and career lessons, called ‘What It Takes’. The overcapacity of housing in Spain and prices of raw land going up 10 times in 18 months in India were some of the earliest indicators for him. After that, Blackstone cut its share of cyclical deals and global real estate significantly.
“We like to see trends across different parts of the world and connect the dots to see what is changing,” said the 72-year-old Schwarzman who, through his career, has advised US presidents and is considered a close friend of incumbent Donald Trump. “It is pretty clear that the world economy is slowing, particularly in manufacturing, which gets affected by trade, which is going through a readjustment because of the US and China.”
He said that while even the Indian market is slowing, it is not in a recession. For Blackstone, 2019 has been its most active year where it has already committed over $2 billion across both PE and real estate. This includes lowcost housing finance firm Aadhar and packaging business Essel Propack, besides commercial realty assets of Indiabulls and Coffee Day Enterprises. India, where the firm has invested about $12 billion, has become the most well performing PE market with returns of over 39%.
Schwarzman, who studied at Yale and Harvard, started Blackstone in 1985 after a successful career as an M&A banker at Lehman Brothers. Since then, Blackstone has listed with a market capitalisation of $63 billion and he has become one of the richest men in the world, with a net worth of $18.3 billion, according to Forbes. But Blackstone could have been much bigger if it had not let go of Black-Rock, which was initially set up by Schwarzman in partnership with Larry Fink and was called Blackstone Financial in the later 1980s.