Private capital giant plans local expansion

The world’s largest private capital business, the $US990 trillion ($1.5 trillion) Blackstone Group, plans to eventually operate almost all its strategies in Australia.

In his first visit to Australia since before the pandemic and less than a year after Blackstone took control of Crown Resorts in its biggest local deal so far, the firm’s president Jon Gray told The Australian Financial Review: “We’ve definitely grown up in Australia. It doesn’t happen overnight. It’s taken a decade plus to get to this point, but we now have real scale in a market that we think is very attractive, both intermediate and long-term.”

Prior to the $8.9 billion Crown Resorts acquisition, US-based Blackstone was very much under-weight in private equity investment in Australia. The only notable acquisition of recent years was clinical research business Nucleus Network acquired from Crescent Capital in 2021. Private equity investment was far outweighed by real estate investment, primarily commercial property.

“We think ultimately we’ll be able to have almost all of the various Blackstone activities in Australia – I’d love to ultimately bring growth equity and infrastructure and all the different capabilities down here,” The Australian Financial Review quoted Gray as saying. “The positive demographics in Australia, the rule of law, the transparency, the concentration of knowledge workers, just how attractive the place is – all of that leads us to believe that we should be able to deploy significant capital for our investors over time.”

Gray conceded that the downturn in commercial property valuations this year had affected Blackstone but the worst affected segment, office buildings, represented only 2% of the firm’s property portfolio. Valuations in targeted segments, such as logistics centres were holding up.

Other private capital sectors targeted by Blackstone are private credit, infrastructure, energy, life sciences, digital assets, leisure and hospitality. Gray singled out private credit as a sweet spot for the immediate future.

Image: Blackstone president Jon Gray.