Blackstone mints it in record year for deals
Blackstone has nearly doubled its London headcount to 500 people during the Covid-19 pandemic as it bets Europe will keep delivering investment opportunities, according to its COO in the region.
“We are at an inflection point of tremendous growth in the business,” Farhad Karim said in an interview. The firm has hired about 200 people in London since March 2020 and is also expanding in Paris, Frankfurt and elsewhere in Europe.
The recruitment spree comes at a time when buyout firms are able to offer an attractive premium to lure dealmakers from investment banks. Blackstone, Apollo Global Management, Ares Management, Carlyle Group and KKR & Co. paid average compensation per employee just shy of $2m for 2021. In comparison, the average pay at the five biggest US. investment banks was $232,000.
Blackstone, which paid out a record $1.6bn in performance allocations to its dealmakers and executives in 2021, is among those that have poached aggressively from Wall Street. Prominent hires include Tara Morrison and Catherine Chiurco from JPMorgan Chase & Co., Caroline Hill from Lloyds Banking and Christopher Weber and Heather von Zuben from Goldman Sachs.
“Obviously, a lot of that talent we are looking for is coming from the investment banking world,” said Karim. “It’s not just a pay differential that is attracting bankers to the firm though. Pay is important but it’s a combination of factors.”
Last year saw dealmaking records shattered with $5.2-trillion of transactions globally, according to data compiled by Bloomberg. Private equity accounted for almost a third of that total and no firm came close to Blackstone’s $122bn haul.
In Europe, Blackstone was involved in takeovers valued at $22bn, making it the second-biggest private equity spender in the region behind EQT AB, the data shows.
Buyout firms remain busy in Europe despite the macro-political environment. Blackstone began 2022 with the largest private real estate deal in Europe, when existing investors in Mileway, a company that owns urban warehouses designed to cut delivery times of food and goods, agreed to a recapitalisation valuing the business at €21bn ($23bn).
“We are not yet seeing activity slow down because of the war in Ukraine,” said Karim, who is also Blackstone’s global general counsel of real estate. “If activity levels remain where they are, private equity M&A could end the year higher than in 2021.”
Blackstone’s only exposure to Russia is through Sponda, a Finnish real estate company it agreed to buy in 2017, a spokesperson for the firm said. Sponda has less than 2% of its total assets in Russia.
Blackstone is keen to build out its life sciences and real estate platforms, according to Karim. He said the UK has a “globally competitive life sciences sector and there’s great demand for well-positioned logistics networks and office space”.
Another area of focus is the market for environmental, social and governance assets. Private equity firms have increased recruitment and compensation for ESG expertise to keep up with the sustainable investing push. Blackstone’s headcount in the sector has grown fivefold globally since 2019.
The London hiring spree is likely to see Blackstone need additional office space there. In the short term, that could include some overflow space before a bigger move is considered when the lease at its Berkeley Square headquarters in London’s Mayfair district expires at the end of 2027.
The US investment firm, which opened a London base in 2000, also leases space on St James’s Square for its real estate management business.
“We’ve been the UK’s largest outside investor for the last decade,” said Karim. “We want to continue that trajectory.”
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