Blackstone's Gray: Private Markets Poised for Growth

In Brief: 

Bloomberg's Sonali Basak interviewed Blackstone President Jonathan Gray at Bloomberg Invest in New York, where he discussed the company's strategic focus on private markets amid current market volatility triggered by newly imposed US tariffs on major trading partners. Gray highlighted the "farm to table" approach of connecting investors directly with borrowers as a key advantage in private credit markets.

Big Picture Drivers:

• Allocation gap: Significant disparity between institutional investors (33%+ in private assets) versus individual investors (only 1%) creates substantial growth runway

• Credit shift: Secular movement toward private credit connects investors directly with borrowers across various lending categories

• Liquidity innovation: Development of semi-liquid, perpetual products without drawdown features making private investments more accessible

• Performance driven: Gray emphasized delivering strong returns as the "true north" for continued capital inflows to private markets

Key Topics Covered:

• Private credit growth: Bringing investors "farm to table" with borrowers through non-investment grade direct lending and specialized finance

• Individual investor focus: Blackstone has grown to $260 billion from individual investors through innovative product structures

• Hedge fund strategy: Emphasis on uncorrelated absolute returns rather than competing directly with multi-strategy giants

• Alternative asset evolution: Semi-liquid structures across real estate, private equity, infrastructure and credit creating new access points

Key Insights:

• Market evolution: Private credit is experiencing what private equity went through earlier – moving from niche strategy to core allocation

• Structural advantage: Semi-liquid perpetual products enable wealth channels to access private markets previously limited to institutions

• Differentiation: Blackstone's hedge fund approach focuses on downside protection and low correlation rather than competing with multi-strats

• Track record: BAAM (Blackstone Alternative Asset Management) outperformed traditional 60/40 portfolios by 1500 basis points with no down quarters in four years

By The Numbers:

• Individual assets: $260 billion managed for individual investors across private market strategies

• Performance: Blackstone's hedge fund business delivered 12% net returns last year

• Allocation disparity: 33%+ institutional allocation to private assets versus only 1% for wealthy individuals

Memorable Quotes:

• "We have grown to $260 billion for individual investors... institutions who are a third or more allocated to private, even wealthy individuals are only about 1%."

• "In both of these areas, I'd come back to our true north. We've got to deliver for the customers. If we do that, I think we'll continue to see major investors take a larger portion of their portfolio and move it into private assets."

The Wrap: 

Blackstone sees significant growth potential in private markets by continuing to innovate product structures that provide individual investors access to previously institutional-only asset classes. Gray's emphasis on performance, differentiated strategies, and addressing structural allocation gaps suggests private markets will continue expanding despite near-term market volatility.