Current slowdown in India is a remarkable investment opportunity, says Blackstone CEO

Stephen Schwarzman, chairman, CEO and co-founder, Blackstone.

India is currently experiencing a slowdown but still remains a great long-term play and the current decline in the Indian economy is a remarkable opportunity to invest more capital in the country, says Stephen Schwarzman, chairman, chief executive officer and co-founder of Blackstone. Edited excerpts from an interview given on CNBC TV18.

What are your views about global slowdown?
It is pretty clear that globally the economy is slowing down at different rates in different parts of the world.

Just starting with US, which is the biggest economy as a country, we are slowing in manufacturing but we still have a full employment economy, we still have high levels of consumer confidence and consumers create 70% or maybe even a little more of the economy in the US.

So if manufacturing, which is roughly 11%, is a little slower, in fact, going down then we can still keep growing for quite some time unless there is something that shakes confidence, which is really a geopolitical type of event that you cannot predict.

Europe is very slow, around 1% growth and they are having enormous troubles trying to get above that. They have interest rates that are below zero and don’t even know how to cope with that. So if they slip into the recession, they will have a lot of the trouble getting out and that is possible.

In Asia, China, which is the biggest economy by far, is slowing. What they report is sort of difficult to know if it is connected with exactly what is going on. They have a lot of policy things they can do to keep their economy going but the bias will be lower rather than higher and because China is going down, that affects emerging markets (EMs) because EMs are the big suppliers to China. Trade is shrinking around the world. That is not helpful in itself and it also scares people around the world and stops other kind of investments that perhaps they would be making. So it will be very useful to find some accommodation between the US and China. So this slowing world won’t create recessions.

Though in India itself is experiencing a slowdown, what feels like a slowdown in India isn’t a recession. It is just lower levels of growth. It may feel like a recession but it is not.

Blackstone has been fairly bullish on the prospects in India specially in sectors like real estate, given the size of the Indian economy and the opportunity that you see, what kind of appetite do you have for India from hereon?

We think India is a great longterm play. It is an increasingly educated population.

Gross domestic product (GDP) per capita goes up, it is a huge population country, which probably within 10-20 years will be the largest population in the world. It shares western values in terms of legal systems and ability to do business.

We have a long-term positive view on India and when things go slower for us in a way that is even a better opportunity because people need to sell assets because of the credit issues in India, for us we can be long-term investors.

As long as we can improve any asset that we buy then we are very happy to do that because we think India will be one of the fastest growing countries in the world over a long-term basis.

So it is a remarkable opportunity for us and we think over time we are going to be putting a lot more capital into India.

You clearly like the real estate sector in India and Blackstone has backed the first real estate investment trust (REIT) in India and you talked about how you have emerged as the largest sort of with $250 billion in real estate for Blackstone. Does the slowdown in India not concern you and do you believe that this is an opportunity to look at more?

I think it is an opportunity. We also own 22 companies in our private equity area, which has also been interestingly our highest return private equity business in the world. So the reason we are positive on India is that it has been terrific for us.

‘Though India is experiencing a slowdown, it isn’t a recession.

It is just lower levels of growth. It may feel like a recession but it is not.’

Source: CNBC TV18