Blackstone has been present in India since 2006 and has invested USD 15 billion in the country, including private equity play in enterprises and also bets on realty.
India is plagued with a slowing economy and lack of finance currently, Blackstone’s chairman Stephen Schwarzman said, hinting that the global private equity major may be interested in distressed asset play in the country. Speaking to reporters at the IIT-Bombay, he also said the country is lacking the robustness in financial institutions. Blackstone has been present in India since 2006 and has invested USD 15 billion in the country, including private equity play in enterprises and also bets on realty.
Schwarzman, who is also the chief executive and co-founder of Blackstone, said his company is “bullish” on India, but from a long term perspective. To a question on distressed asset investing, which a lot of its global peers have entered into, he said, “issues with India are more about slowing economic growth and limited credit extension by the banking system and neobanks and that should create more need for owners of companies to look for other sources of liquidity.” “For us, if there is something very attractive here, we’ve a lot of long term confidence in India. So, we will be very active buyers or lenders in this market,” he added.
The company has a dry powder of USD 150 billion of committed money yet to find takers globally which makes it the best placed to take care of such requirements, he said. The financial system in a country is akin to the heart in the human body and if financial institutions in a country aren’t in great shape, it can impact countries in a broader sense, he said during a chat with Infosys chairman Nandan Nilekani earlier.
Schwarzman said the coronavirus epidemic is a black swan event globally and flagged risks to companies’ profits globally because of that. A self-professed Republican follower, Schwarzman said it is unclear if the US Fed’s decision to cut rates will have the desired impact and pointed to the markets’ negative reactions on Tuesday to illustrate his point. It is not markets or the availability of the money which will decide the way forward, but the way consumer confidence evolves from here on, he told reporters.
Blackstone India will be focusing on the real estate sector to create spaces that can be hired by IT companies and also warehousing space going forward, he said. At present, India has slow growth, high inflation and a banking system that has high amount of NPAs, he said. After the 2008 crisis, the US’ banking system is one of the most conservative in the world and differs from the Europeans because the former chose to take all the hits upfront, he said, asking India to emulate the same.
“We are interested in India because it has grown enormously, it’s got the youngest working-age cohort in the world, it’s strides in technology and education levels are going up. These are things that work well. Slight downturn in economies doesn’t affect us. We look at a 5-10 year range. Sometimes it’s better to be an outsider,” he said.