Page 85 - Bloomberg Businessweek - November 19, 2018

Bloomberg Businessweek The Year Ahead 2019 Finance

Interview Jonathan Gray
Jonathan Gray
Interview

We make commitments to them when we take
their capital for a decade or more. That is the
essence of our business model, and we don’t
intend to change that. In this case, obviously
what occurred there was very concerning. But
again we’re taking a long-term view.

You’re now in many businesses beyond private
equity and real estate. What are the implica-
tions of that?

It gives us many more tools as the environment
shifts. Use energy as an example—that’s a
market that went through its cycle in 2016 and
hit its bottom, and it’s still coming out of that.
There are good opportunities for our energy
fund. We’ve got all these different things we
can do, and it makes the investable universe
much larger for us and makes our business
more all-weather. “It’s getting
tougher as
▷ Gray is president and chief Blackstone went public in 2007. It seems like
70 interest
operating officer of private equity stock investors have said, “We kind of don’t rates start
giant Blackstone Group LP get it.” Why? to move up”
We definitely came out at a tough time. The
What’s the biggest single issue for Blackstone nature of the business is changing. As we get
in 2019? more perpetual capital to manage, we get a
step up on our fee earnings, which investors
I think for any large investment organization, value more highly because they’re more pre-
it’s thinking about deploying capital as you get dictable and that grows. What we try to tell
later in an economic cycle. investors is that the most sophisticated pools
of capital in the world are enthusiastic about
How late are we in the economic cycle? what we do. We raised $125 billion in the last
12 months, and we’re talking about similar num-
I differentiate between the economic cycle bers going forward. This is a sector that people
and the valuations cycle. This is more like should not put a huge discount on in terms of
where we were in 1997, when we had a really valuation, but actually a premium. We pay out
good economic run which would continue these large dividends, and we’re now buying
for a number of years, but valuations didn’t back stock.
grow as much. I think the underpinnings eco-
nomically in the U.S. are still pretty good, but What’s your biggest worry for 2019?
it’s getting tougher as interest rates start to
move up. In the U.S., that we get a movement upwards in
rates and that shakes some asset classes. In
Saudi Arabia’s Public Investment Fund made a Europe, I think that will be more about volatil-
big commitment to Blackstone’s infrastructure ity. The Brexit thing will be messy until the end,
fund. Have recent events changed anything? but I think things will continue to muddle along.
The good news in Europe as an investor is a lot
We’re very much in a long-term business. We of investors are scared off and that’s creating NATHAN BAJAR
have long-term relationships with institutions. opportunity. <BW> ——Jason Kelly