Blackstone Inc., the world’s largest alternative asset manager, expects India and Japan to be its most active markets in Asia in 2024 based on capital allocation. Joe Baratta, Blackstone’s global head of private equity, said in an interview in Tokyo that “India has the highest growth; it also has the most ebullient stock market” and “Japan will also be very interesting as a market”.
Blackstone has been active in India, where it recently acquired a stake in two hospital chains. As for Japan, Blackstone is open to do deals in Japan that are anywhere from $300 million to more than $2 billion, and in sectors like IT, healthcare and consumer. Baratta added that it has transactions in the consumer and industrial sector in the pipeline.
This comes at a time when dealmaking has dried up with high interest rates, banks becoming more hesitant to lend, and volatile markets. Despite these challenges, Baratta said the company’s private equity pipeline is more robust right now than at any time since Blackstone pulled back on dealmaking in mid-2021, when inflation started becoming a concern.
Factors Driving Deal Activity in India
- Strong economic growth: India is expected to be one of the fastest-growing economies in the world in 2024, with a growth rate of around 7%. This is due to a number of factors, including a young and growing population, a rapidly expanding middle class, and government reforms aimed at boosting investment and growth.
- Ebullient stock market: India’s stock market has been on a bull run in recent years, and is currently one of the best-performing markets in the world. This is making it easier for private equity firms to raise money and invest in Indian companies.
- Diversified economy: India has a diversified economy with a strong manufacturing sector, a growing IT sector, and a booming consumer market. This makes it an attractive investment destination for private equity firms.
Factors Driving Deal Activity in Japan
- Decoupling from the rest of the world: The Japanese economy is relatively insulated from the economic woes of other countries, making it a relatively safe haven for investors.
- Strong corporate governance: Japan has a strong corporate governance system, which makes it more attractive to institutional investors.
- Undervalued assets: Many Japanese companies are considered to be undervalued, which is making them attractive to private equity firms.
Focus Areas for Blackstone in India and Japan
Blackstone is particularly interested in investing in the following sectors in India and Japan:
- IT and healthcare: These sectors are both growing rapidly in both countries.
- Consumer: The consumer sector is also strong in both countries, and is being driven by a growing middle class.
- Industrials: There is a lot of potential for growth in the industrial sector in both countries, as they are looking to modernize their infrastructure.
Overall Outlook for Private Equity in Asia
Blackstone is bullish on the long-term outlook for private equity in Asia, and expects to see strong deal activity in 2024 and beyond. The firm believes that India and Japan will be the two most active markets in the region.
Here are some additional insights from Blackstone’s head of private equity, Joe Baratta:
- India is a very attractive market for private equity firms, and we are excited about the opportunities there.
- Japan is a more mature market, but there are still a number of attractive investment opportunities there.
- We are confident that private equity will continue to play a major role in driving economic growth in Asia.
