Stephen Schwarzman, the Blackstone Group’s co-founder and CEO who is moving to Paris part-time, sees some opportunities in Europe.
Blackstone has been very pessimistic about Europe for the past four to five years, said Schwarzman, who was speaking Tuesday at the Goldman Sachs financial services conference. European companies have similar or higher multiples as those in the United States, but their growth rates are much lower. “We felt that the risk reward equation was really wrong,” Schwarzman said. “We pretty much just kept away.”
But now, Blackstone is waiting to see how beaten up the European psyche gets and where it’s willing to sell assets, he said. “We have a sixth sense that there’s a lot of opportunity,” Schwarzman said.
Real estate in Ireland is a prime opportunity, he said. The country has set up a “massive” resolution trust fund, the National Asset Management Agency, that takes on the problem loans of Irish banks.
Schwarzman expects Ireland to start selling assets. India is promising as well. And, while Blackstone has never bought anything in Central Europe, it is apparently considering something there. “If we do do it, it will be a neat deal,” Schwarzman said.
The Blackstone CEO also took swipes at the fourth estate for proclaiming the death of private equity during the financial crisis. “The press would have people believe the entire PE industry would go bust with massive maturities, declining earnings,” he said. “They wrote the epitaphs of that industry. By the way, they were all wrong.”
As has been widely reported, Schwarzman took jabs at Ben Bernanke, the Federal Reserve chairman, who said during a “60 Minute” interview that the Fed “could raise interest rates in 15 minutes if we wanted to.”
Bernanke, Schwarzman said, is looking at the economy as though the Fed can compete with the private sector for yield “for financial institutions, and they will divert that and dramatically slow the economy.”
“As I look at what’s going to happen out there, it’s good to know that the dealer at the table has a different way of playing this,” said Schwarzman (this last quote is from Dealbook).