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Galloping inflation, rising interest rates, and geopolitical turmoil are likely to shrink the number of deals Blackstone Group, the world’s largest private equity firm, takes part in this year, company president Jonathan Gray said in a Financial Times interview.
“It’s hard to predict deal activity, although I would expect it to be lower than last year,” he said.
The company invested $22.8 billion in this year’s first quarter, barely a third of the $66 billion it deployed during 2021’s final quarter, and has another $16 billion in deals waiting to close.
However, also in this year’s first quarter, Blackstone booked one of the most profitable three-month stretches in its history.
New investors boosted the company’s assets to $915 billion, 41 percent more than a year earlier.
“We raised more money in retail in the first quarter than in the fourth quarter, despite inflation, interest rates, war, and COVID,” Gray said.
Blackstone also sold $23.3 billion in assets during the period.
This month, Blackstone agreed to buy American Campus Communities, a student-housing real estate trust, for $13 billion. (See story in this issue.) It also partnered with the Benneton family of fashion fame to buy Atlantia, an Italian international infrastructure company, for €54 billion.
Gray predicted a slowdown in overall private equity activity ahead, now that the era of low interest rates and low inflation is over.
However, he said talk of a U.S. recession “feels a little premature” and that many tech companies that have seen their stock prices tank recently look like good buying opportunities.