The buyout titan has been back in the news again lately because he’s back where he’s spent the lion’s share of his career: at the centre of a huge deal. The London Stock Exchange has agreed to buy the Refinitiv terminals business, in which Blackstone owns a 55 per cent stake, for $US27 billion. Last month, however, the Hong Kong stock exchange launched its own bid for the LSE, which threatens to scupper Blackstone’s Refinitiv sale.
But we’re talking on the top floor of Blackstone’s lavish Berkeley Square offices because he’s made a flying visit to the UK to plug his book, What It Takes, a memoir of a 50-year business career-cum-entrepreneurs’ guidebook. Starting out in his parents’ Pennsylvania linen store, through a rain-making career at Lehman to founding Blackstone with just $US400,000, the 378-page book is stuffed with anecdotes and pictures of him pressing the flesh with world leaders and celebrities. The book boasts an endorsement on the front cover from Bank of England Governor Mark Carney, no less, and 14 pages acknowledging everyone from his three Jack Russell terriers to Chinese president Xi Jinping.
Schwarzman’s links to China and friendship with Trump put him in a unique position as a broker between the two countries in the tense trade war resulting in the hundreds of billions in tariffs which have left scars on the world’s manufacturers. Blackstone’s float in 2007 was the Chinese government’s first ever foreign equity investment and, almost 30 years after his first visit, he has a bulging contacts book there.
He made eight ultimately fruitless trips to China last year on behalf of the Trump administration in some of the “most complicated” negotiations he has ever experienced. But despite the Twitter bombs of the president, who “chose to operate in a way that was profoundly different from his predecessors”, as What It Takes diplomatically puts it, trade talks are due to resume next week and Schwarzman is hopeful the two sides will come to an agreement.
He stands by Trump for “trying to level the playing field” for US firms, as it costs three times as much for them to sell goods to China as it does for Chinese firms trading the other way: “With China, there’s no president in 70 years who had a successful negotiation. So this particular government is taking a different approach. Maybe it’ll work, maybe it won’t, but none have worked.” The tariffs are there as “an incentive to come to the table”. But he’s optimistic because the “unfair” trade imbalances “have to be addressed”, and “over time, [they] will because it’s in everyone’s interest that they do that”. It’s hard to squeeze a cigarette paper between Schwarzman and the president in public. He doesn’t want to discuss the 2017 Charlottesville protests where clashes between white supremacists and counter-protesters resulted in one death. Trump poured petrol on the flames with comments about the “very fine people on both sides” leading to revulsion and withdrawals from the president’s Strategic and Policy Forum, a bipartisan collection of US business leaders which Schwarzman chaired. Talking about Charlottesville “is not a productive use of my time” he says testily, although he admits the chances of ever reviving the board are slim. “I don’t think today I could assemble as easily a bipartisan group because of the divisions in the country.”
The UK is another divided country thanks to Brexit, and Schwarzman has dug out opportunities. Blackstone has been active over here since 1998, when it spent £520 million on the Savoy hotels group. Its more recent investments include Birmingham’s NEC exhibition centre, and thousands of Network Rail’s railway arches, making it the largest landlord to small businesses in the UK. In June, it teamed up with the founders of Denmark’s Lego empire and a Canadian pension fund to take private Madame Tussauds and Legoland operator Merlin Entertainments, a business it floated in 2013. Aside from the Refinitiv transaction, Blackstone is looking around at other deals.
Schwarzman admits Brexit has “lowered prices” but stresses his firm is a long-term investor: “If we can buy some great assets at a lower price, in recognition that nobody knows what the economic outcome of Brexit will be, but at some point that the country will normalise, we’re not as put out of sorts as somebody with a shorter-term perspective who has to guess right.”
Does he see himself deploying more of Blackstone’s firepower in the UK? With a wry nod to the current political chaos, he says “this probably wouldn’t be the week” but adds that “we’re still working on things”. Blackstone has done well in the UK and other English-speaking countries, Schwarzman says, and he has long-term confidence in the market. “That’s not going to stop with any one point in time with a political thing.”
Maybe he’s mellowed with age but he’s reluctant to come out swinging against the Hong Kong stock exchange which threatens his sale of Refinitiv. The man who once said that he wanted “war – not a series of skirmishes” and always thought about “what will kill off the other bidder” chooses to hide behind the lawyers rather than discuss the approach. He thinks the Refinitiv deal is “good for both companies” and calls the firm a “colossus hiding in plain sight” in his book. But it remains to be seen whether another Schwarzman maxim – “time wounds all deals” – will be proved correct the longer this saga goes on. He does call Refinitiv “a big bet, because we’re taking stock” which will leave Blackstone and co-owner Thomson Reuters with a 37 per cent stake in the LSE.
Schwarzman is regarded as one of Wall Street’s longest-serving veterans but the question of when he plans to step down triggers immediate indignation.
“I’m having a wonderful time. And I still somehow think I’m 38 years old. And I have the same energy, I have the same enthusiasm. I’m lucky that I’ve learned a lot during that period. And we built a remarkable company at Blackstone, and I do all these not-for-profit things and also help out my own government from time to time. You know, why would I ever stop? I’d stop if I weren’t any good.”
When he does finally call it a day, it will be back to the books. He adds: “Now I don’t need as much fiction because the world we live in is barely believable.”