Blackstone plans to deploy more capital in India, says President Jon Gray

Last month, Gray said India had delivered Blackstone’s highest private equity returns globally after the firm shifted towards taking majority or equal-control stakes and focused on sectors such as information technology services, commercial real estate and domestic manufacturing, Bloomberg reported. He also said Blackstone has rapidly scaled up its investments in AI and is already seeing the benefits.

According to Gray, nine of the 10 Blackstone portfolio companies that gained the most this year were in AI. At the same time, Indian hospital portfolio company Aster DM Quality Care Ltd (erstwhile Aster DM Healthcare Ltd) stood out amid the global AI frenzy, reinforcing Blackstone’s view that the country still has significant room for growth. In the past year, the firm has invested in Indian AI cloud start-up Neysa, Indian Premier League team Royal Challengers Bengaluru and Federal Bank Ltd.

Gray said fiscal stress in Europe was a bigger concern at present than in the US. “The US is going to have to face tough choices, but I think now this is more of a France, UK, continental Europe challenge,” he said at the forum on Tuesday. He attributed this to much lower rates of growth as well as very large deficits.

His comments come as major developed countries grapple with rising debt burdens and elevated interest rates that are weighing on growth. Gray said fiscal crises are often resolved only when markets force action, and pointed to Greece’s debt overhaul more than a decade ago as an example. “We’re now facing a bit of a reckoning,” he said, adding that there is a perception that some countries are running deficits well above their inherent growth rates and that such situations leave them exposed when shocks emerge.

Gray said governments whose public debt exceeds annual gross domestic product are in a difficult position. “It leads to affordability challenges, particularly around housing, and means having to make tough choices around taxes and social services,” he said. For now, he said, the US is keeping its rising debt problems at bay through faster growth driven by the AI boom. “When you look at the technology, the investment, what’s happening with AI, you’re seeing it lead to a lot of capital flows in, and that higher rate of growth gives you a little more room,” he said.

He described technology as the defining force of the current period, and also a potential threat. Gray said ongoing regional conflicts and tensions between the US and its allies were manageable by comparison. “Technology probably is the biggest sort of existential risk, but this is one that has been slow-moving, and it’s going to force very tough choices,” he said while speaking on a panel with Tata Sons Ltd chairman Natarajan Chandrasekaran and former UK prime minister Rishi Sunak.

In response to this shift, Gray said Blackstone remains heavily committed to investing in energy and digital infrastructure, Bloomberg reported.

“Blackstone will continue to be very long on electricity because everything we’re talking about around technology — the data centres, autonomous vehicles, robots — all of it is going to use electricity,” he said. He added that the firm would also maintain heavy exposure to defence, saying spending in the sector has become a near-universal priority as governments invest more in their own resilience.

Gray also said Blackstone would keep “doubling down” on life sciences. He said AI would contribute to human health despite the risks that dominate the current debate. “This technology, which we all rightfully focus on the risks — the benefits to human health are going to be the No. 1 thing that’s going to come from it,” he said, while adding that significant trial activity would still be needed to realise those gains.