As Blackstone barrels toward a trillion-dollar fund goal, there is inward growth, outward value

The new approach has forced the New York company to plow billions into faster – growing companies – including the technology sector – to which it has previously received less attention.

It has taken Blackstone out of their traditional comfort zone by turning underperforming companies through cost cuts and efficiency improvements – and making a comeback by using plenty of financial support on loan.

The growth beast has captured almost every corner of the sprawling company, including its real estate, credit and hedge fund businesses. Among the funds in its main purchase fund is a strong interest in Bumble Inc., Inc.

BMBL 2.98%

acquired by Blackstone in 2019 in a deal that valued the date app owner at $ 3 billion. The bet has almost plummeted in value as the company’s market capitalization went to around $ 14 billion after their first public offering in February.

Mr. Gray’s thematic approach and the spawning direction of growth show how the 51-year-old heir apparent to CEO Stephen Schwarzman is making his mark on the company as he moves to towards a goal of managing $ 1 trillion in assets by 2026.

“Investment is about looking ahead, but the future is fast approaching,” he said in an interview. “You want to be open to businesses that will benefit from this change.”

A big goal for employees in the company’s different industries is to think about the same topics and talk to them together.

Blackstone has long been interested in identifying growing businesses, but under Mr. Gray it has become clearer about what it will not buy, said Joseph Baratta, global head of equality private at the company. In addition to brick-and-mortar retailers, that list includes established media-and-telecommunications suppliers and companies that rely on single-use plastics.

“There are some companies that we are not going to invest in, no matter how cheap they are,” said Mr Baratta.

The strategy is not without risk. The funds the company raises could be among the first to be hit if, for example, the recent rise in interest rates continues as the economy recovers. -out of the spread lock with pandemic.

Competitors such as Apollo Global Management Inc.

largely opposed to a growth strategy, preferring to invest in hard-to-play areas such as gaming and corporate sales. But even the historically value-oriented Apollo has made more technology-related deals in its latest purchase funds. The company also built two blank check companies aimed at growth-based contracts.

Topics that have led Blackstone’s recent investments include the ongoing shift to e-commerce and the advancement of the life sciences industry with technology.

The company has launched a new business dedicated to investing in life sciences – including supporting new drugs at late development stages, the last of which would be traditional square purchase aims. He hired Jon Korngold, a veteran of General Atlantic pioneer who was investing growth, to build a new business taking on mini-commitments in growing companies.

Blackstone, previously not present on the west coast, has opened a San Francisco office and hired officers and consultants from technology companies such as Amazon.com Inc.

and avalanches Inc.

SNOW 1.90%

And in November, they hired Jennifer Morgan, former vice president of software giant SAP SE, to lead a team helping the company’s 200-plus portfolio companies “drive growth through globalization. digital switchover. ”

Blackstone is not alone. A growing number of competitors and stock investors have embraced growth as the decadelong bull market pushes up the price of all types of assets and leaves fewer and fewer pockets of value . The two-year rolling average of U.S. purchase price multiples for U.S. purchases reached the highest 12.8-hour earnings before interest, taxes, depreciation and depreciation in 2020, according to a study by McKinsey & Co. That’s up from 11.9 hours in 2019 and 10.2 hours in 2015.

Mr. Gray’s thematic push was born from personal experience. He led Blackstone’s $ 26 billion deal to buy Hilton Hotels Corp.

HLT -0.99%

on the eve of the financial crisis. As the hotel chain industry suffered during the economic downturn, outsiders would often sign the deal. Instead, Hilton became one of the most successful private equity investments ever, reaching more than $ 14 billion in profits, or more than three times Blackstone’s original investment.

Mr Gray said the experience had taught him that Blackstone and Hilton’s management efforts might not be enough if the company did not benefit from a long-term growth shift in global travel, the dissertation underpinning the investment. .

“With full time, the important thing was that you chose the right neighborhood, not the right house,” Mr Gray said.

(Mr. Gray’s respect for hotels continues, seeing Blackstone and Starwood Capital Group’s agreement this month to acquire an Expanded America Stay America Inc.

STAY 0.26%

in a bet that a clear space will be scarce for the lodging industry during Covid-19’s prosperity.)

He also led the company’s first work into businesses in 2010, pledging the rise of e-commerce worldwide. Blackstone is now the largest owner of warehouses used for e-commerce, with an approximately $ 100 billion portfolio comprising of 880 million square feet of such properties worldwide .

Both successful property bets prompted Mr Gray’s rise at the giant’s private opportunity helped.

One example of how its growth-related topics are being applied across the company is Blackstone’s April 2020 investment in biotechnology company Alnylam Pharmaceuticals Inc.

ALNY 2.94%

The $ 2 billion contract included a $ 1 billion investment led by Blackstone Life Sciences in part of the entire nations of the future cholesterol drug.

His credit arm also provided Alnylam with a term loan of up to $ 750 million, and Blackstone bought $ 100 million of the company’s stock. The company’s real estate business also owns Alnylam’s domain, BioMed Realty, which has 91 life science buildings. Blackstone last year agreed to sell the company from one of its assets to another in a deal valued at BioMed at $ 14.6 billion.

Write to Miriam Gottfried at [email protected]