Blackstone’s Tony James bullish on China, sees COVID-driven consolidation across sectors

Photo: Bloomberg

China’s rapid recovery from the COVID-19 pandemic is a testament to the resilience of the country and its economy, and validates American alternative investment giant Blackstone Group’s bet on it.

“The China economic miracle is the greatest economic miracle in history,” said Tony James, executive vice-chairman at Blackstone. “I think it’s going to be the only major country to have [positive] growth this year.”

Blackstone, which manages the world’s largest realty fund with $20.5 billion raised last year, has investments in China spanning property and private equity sectors. Its portfolio in the country includes Mapletree Business City Shanghai, and VivoCity Shanghai, acquired for $1.25 billion from Singapore’s Mapletree Investments last year.

According to a Reuters report in March, Blackstone held talks to privatise Hong Kong-listed property developer SOHO China in a $4 billion deal. The transaction was reportedly stalled, owing to the uncertainties brought about by the COVID-19 pandemic.

“We have a lot invested. We’re believers in China long term,” James was quoted as saying to CNBC on the sidelines of its Singapore Summit.

In the interview, James also cautioned that businesses across the board are facing headwinds on multiple fronts that are going to weigh on earnings growth.

“There’s higher taxes; their operating costs because of COVID are up; their supply chains are going to be less efficient; deglobalisation will hurt productivity; state and local employment will be under pressure because of the [government budget] deficits.”

Consequently, equity returns are expected to be “anaemic” over the next five to ten years, he said.

At the same time, record-low interest rates are fuelling corporate activity. “If you’re going to go out and buy something, now’s a good time in terms of your cost to capital,” James said.

A result of this is consolidation, driven by leaders in each sector that have emerged also in part due to the disruptions caused by the COVID-19 crisis.

“They were the companies that could afford to invest in new products, R&D, new capex, customer relationships, keeping their employees,” James said.

“We’re in a bit of a world where the winners have access to great amounts of cheap capital. And it’s a time where they have been rewarded through consolidations.”

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.