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Blackstone Inc. (BX) Barclays 22nd Annual Global Financial Services Conference (Transcript)
BXBlackstone(BX)2024-09-11 17:48

Macro Perspective * Inflation and Economy Cooling: Blackstone believes inflation and the economy are cooling, with inflation at target levels and labor markets softening. * Resilience and Deceleration: The overall economy is cooling but remains resilient, with decelerating revenue growth and resilient margins. * Cautiously Optimistic for Soft Landing: Blackstone is cautiously optimistic about a soft landing, with flat private sector job growth and neither significant hiring nor layoffs. * Rate Environment: The fair value of the 10-year Treasury yield is important for capital markets and Blackstone's business, with current levels being constructive. Blackstone's Business * Transaction Environment: The transaction environment is improving, with signs of the return of animal spirits and a potential robust 2025 in terms of activity levels. * Deployment: Blackstone has deployed or committed over 50billioninthesecondquarterand50 billion in the second quarter and 90 billion over the three quarter period, with 181billionofdrypowder.∗∗∗Realization∗∗:Realizationactivityisexpectedtobenefitfromtheimprovingtransactionenvironment,althoughnear−termscaledispositionsarenotyetrobust.∗∗∗Fundraising∗∗:Blackstoneisexcitedaboutthenear−termpipelineofgrowth,includingnewstrategiesandsectorswheretheyhavehadextraordinaryperformance.GrowthatScale∗∗∗ScaleasaFriend∗∗:Blackstonebelievesscaleisafriendandcreatesadvantagesforperformanceandgrowth.∗∗∗DigitalandAIInfrastructure∗∗:BlackstoneisthelargestfinancialinvestorinAIinfrastructureglobally,withsignificantinvestmentsindatacentersintheU.S.,Asia,andEurope.∗∗∗PrivateMarketsPotential∗∗:Privatemarketsarestillearlydays,withenormouspotentialforgrowth.∗∗∗TraditionalInstitutions∗∗:Traditionalinstitutionsaregrowingallocationstoprivatemarkets,particularlyinareaslikeprivatecredit.CreditandInsurance∗∗∗PrivateCredit∗∗:Privatecreditisagrowingmarketwithsignificantpotential,andBlackstoneiswell−positionedtocapturethisopportunity.∗∗∗Insurance∗∗:Blackstoneisthelargestnon−captivemanagerofalternativeassetsforinsuranceclients,witha181 billion of dry powder. * **Realization**: Realization activity is expected to benefit from the improving transaction environment, although near-term scale dispositions are not yet robust. * **Fundraising**: Blackstone is excited about the near-term pipeline of growth, including new strategies and sectors where they have had extraordinary performance. Growth at Scale * **Scale as a Friend**: Blackstone believes scale is a friend and creates advantages for performance and growth. * **Digital and AI Infrastructure**: Blackstone is the largest financial investor in AI infrastructure globally, with significant investments in data centers in the U.S., Asia, and Europe. * **Private Markets Potential**: Private markets are still early days, with enormous potential for growth. * **Traditional Institutions**: Traditional institutions are growing allocations to private markets, particularly in areas like private credit. Credit and Insurance * **Private Credit**: Private credit is a growing market with significant potential, and Blackstone is well-positioned to capture this opportunity. * **Insurance**: Blackstone is the largest non-captive manager of alternative assets for insurance clients, with a 211 billion platform and significant growth potential. Real Estate * Cyclical Recovery: The real estate market is in a cyclical recovery, with asset values stabilizing and increasing. * Investing: Blackstone has deployed or committed over 20billioninrealestatethisyear,withafocusonsecularthemeslikelogistics,rentalhousing,anddatacenters.∗∗∗PortfolioConstruction∗∗:Blackstone′srealestateportfolioiswell−positionedtobenefitfromtherecovery,withastrongsectorselectionandportfolioconstruction.Infrastructure∗∗∗GlobalMarket∗∗:Infrastructureisaglobalmarketofincredibleimportanceandattractivegrowth.∗∗∗PerpetualStrategy∗∗:Blackstone′sperpetualstrategy,BIP,hascrossedthe20 billion in real estate this year, with a focus on secular themes like logistics, rental housing, and data centers. * **Portfolio Construction**: Blackstone's real estate portfolio is well-positioned to benefit from the recovery, with a strong sector selection and portfolio construction. Infrastructure * **Global Market**: Infrastructure is a global market of incredible importance and attractive growth. * **Perpetual Strategy**: Blackstone's perpetual strategy, BIP, has crossed the 50 billion milestone, with significant potential for further growth. * FRPR Process: The FRPR process will crystallize significant fee-related performance revenues in the fourth quarter and beyond. People and Culture * Long-Term View: Blackstone takes a long-term view and focuses on building an enduring institution with a focus on quality and excellence. * Opportunity and Meritocracy: Blackstone offers open-ended, uncapped career opportunities to all employees, regardless of tenure. * Performance and Innovation: Blackstone's culture is a culture of both performance and innovation, with a focus on being good at investing and also good at innovating and growing. Technology and AI * Data and AI: Blackstone believes private markets are advantaged by data and AI, with the ability to leverage insights and learnings from their private portfolio. * Technology Strategy: Blackstone's technology strategy focuses on making the firm more productive operationally and harnessing data better for revenue generation. * AI Infrastructure: Blackstone sees significant opportunity in using its scale platform to be a significant capital solution provider to the most important players in a transformational time.