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Pulse of Private Equity

Steve Schwarzman
Steve Schwarzman

Steve Schwarzman, Chairman & CEO of The Blackstone Group is one of the more powerful players on Wall Street.

Blackstone is the world's largest private equity firm with $96 billion in assets under management.

Schwarzman co-founded Blackstone back in 1985 and has been instrumental in its development since. According to Capital IQ, it has been involved in two of the largest private equity deals this year - October's purchase of Busch Entertainment and May's acquisition alongside other investors of BankUnited.

In a rare and exclusive interview, Maria Bartiromo spoke to Steve Schwarzman this afternoon on Closing Bell. (A transcript of the entire interview is available here)

With the rally in equities since the lows of March, Schwarzman's Blackstone Group is planning to list up to eight companies and sell at least five others. For Schwarzman, this is a result of the change in the landscape from six months ago. Schwarzman said "with the world just right on the precipice of the maximum decline in the economy, now we sort of start thinking about deals on a geographic basis."

Trading the Globe

Where does Schwarzman see opportunity? At this point, he likes the U.S. and Asia, but the slower growth in Europe has kept him less focused on that continent. Specifically on Asia, Schwarzman sees growth in China, India, Indonesia, Australia and even Japan. He's hard-pressed to find an economy that isn't growing in Asia!

Lessons Learned

Putting it all into perspective, Schwarzman said "the impact of rating agencies on subprime loans and the ability to create leverage in the system generally and that was way overdone." That ended up impacting the American consumer, the real estate market and to some extent, private equity. Schwarzman felt that "private equity was paying too much money for companies as were industrial companies buying businesses."

Schwarzman however added, that while we have seen many economy cycles, "we haven't done it with this much global coordination." Going forward, he expects the regulatory system to be revamped, keeping the best parts and engineering out the dysfunctional parts.

Paradigm Shift

A discussion on global opportunities isn't complete without China. While many investors recognize the opportunities that this vast and rapidly growing emerging economy offers, Schwarzman said that investors need to start viewing the world in terms of who China touches. He gives the example of China's investments in Latin America and Africa, and how by buying commodities from these regions, Beijing inevitably gives these countries some economic certainty.

Liza Tan contributed to this article.

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