Blackstone CEO Steve Schwarzman spoke with Fox Business Network’s (FBN) Maria Bartiromo regarding the European Central Bank (ECB) bond buying program, opportunities in Europe, the impact of the energy market and the 2015 outlook for Blackstone. Regarding the ECB bond buying program, Schwarzman said, “I think it’s a good thing,” and, “it’s probably a little bigger than most people anticipated.” Schwarzman went on to discuss the declines in the energy market, saying, “well I think this is one of the most consequential moves since I have been in finance,” and “when things collapse like this, a lot of people get into trouble and that gives you the opportunity to buy debt in companies that are not doing well.” As for the 2015 outlook for Blackstone, Schwarzman commented, “we have a lot of momentum at the firm in all of our areas.”
Blackstone CEO on the ECB bond buying program:
“I think it’s a good thing. I think it’s probably a little bigger than most people anticipated. He tends to be bold. It’s tough to get 17 countries together voting for anything and he managed to do it. This takes European interest rates, which are low, puts them even lower, should inject a little bit of growth into Europe and also some confidence in addition. It’s something we did in the US, some version of this three times, and so seeing it appear in Europe which has been years behind a US recovery, is important. But it still does not address substantive reforms that need to be done in Europe as well.”
Blackstone CEO on opportunities in Europe for investing:
“We’ve been very active buyers in real estate in Europe. In fact, we’ve been the largest buyer of real estate in Europe and we did it on the basis of a no growth Europe scenario overall. This can make things better for us in that sense and there’s been real confidence lacking in Europe, and frankly, not much money coming from the banking system which has been shrinking and so this is an attempt to reverse that to move asset values higher which would create better markets.”
Blackstone CEO on if he is currently buying real-estate in Europe:
“Yes. It depends what you’re buying and what you’re buying. There is not just one thing called real-estate. We are actively looking in Spain and Italy, we have selective things in the U.K. and also Germany and the Netherlands and France. It depends what type of asset class, what kind of shape it is in, what kind of price you can buy it for.”
Blackstone CEO on if banks will do more lending because of ECB program:
“I’m not sure. It will provide much more liquidity to the system. Part of the issue with the European banking system is a combination of kludgy, bad loans, as well as shrinking their absolute size to get them in line with BASEL III, which is meant to make banks safer and sounder. So I think providing much more liquidity in their system could be a good thing.”
Blackstone CEO on getting in on market share:
“Some of the things we do, and we’re going to plan on in Europe, is to lend money to companies that just simply can’t get it. And so what we try and do is go into places where there are safe things to do, where there is market dislocations, and we are a beneficiary of these factors.”
Blackstone CEO on energy and the impact of lower oil prices:
“Well I think this is one of the most consequential moves since I have been in finance, when you see market the size of the energy market basically drop 50 percent in six months. That is bound to create all kinds of the issues. For us, on the investing side, it represents one of the greatest opportunities I have seen in a very long time. It is a complex sector and it is a sector where high levels of knowledge are absolutely essential. It is not like buying things that everybody understands, like food. Here, you’ve got stuff that’s underground. You can’t even see it. You don’t know how much stuff is there. Sometimes you don’t know whether it’s there at all. Then it comes out of the ground and you move it around different places and different ways. You can liquefy it, you can freeze it, you can do all kinds of stuff with it. And so it needs a high knowledge base, but when things collapse like this, a lot of people get into trouble and that gives you the opportunity to buy debt in companies that are not doing well. It gives you a chance to lend money to them, because most people don’t want to give companies in trouble loans. It gives you the ability to make partnerships with companies that want to expand but don’t have the money anymore and have made commitments, whether they are for drilling or for other things. They just can’t write their check. And so we have that type of money.”
Blackstone CEO on Blackstone 2015 outlook:
“We have a lot of momentum at the firm in all of our areas. It has been a very good time for us, and we have been growing at very, very high rates for actually decades. And the fundamentals now in the alternative investment area, as more and more institutional and individual investors go into an asset class where — with ourselves, we average somewhere around 1,000 basis points over Standard and Poor’s average — and that type of compounding effect, whether it’s for institutions or individuals, leads to more money being directed. And we are the largest factor in this industry.”
