MUMBAI: Its $50 billion investments in India place Blackstone among the top 10 business houses. The world’s largest alternative asset manager plans to double its investments in the next five years mainly in private equity and real estate, and expand into infrastructure, credit and growth investing. In an interview with TOI, Jonathan Gray, president and COO of Blackstone, speaks of how the focus is on building businesses.Despite being the fastest-growing large economy, India is witnessing capital outflows. What ails foreign investment?The energy-price shock from the war, rising interest rates, AI disruption fears in IT services and India’s once-high market valuations have triggered a correction. Yet, underlying growth remains strong, with the PM citing nearly 8% economic growth and market earnings expected to rise at mid-teens rates in Q3.For long-term investors, the reset offers a better entry point, with lower valuations improving opportunities for new capital. Markets may turn fickle, but sustained earnings growth should draw global capital back. We see this as a temporary cold patch and will continue investing.Does currency depreciation worry you? What needs to be done?Currency depreciation has been the biggest headwind for foreign investors, making faster-growing businesses a better bet than bond-like assets with flat returns. We focus on high-growth healthcare, financial services, travel, digital infrastructure and real estate, including malls, offices and warehouses. India has made major strides in physical infrastructure, from airports and flyovers to GST reform, digital payments, legal systems and capital markets. These improvements have opened sectors once inaccessible to investors like us. So, rather than focus only on what govt can do better, it is important to stop and say they have done a heck of a job.Last year, you spoke about making delisting easier…India’s 90% shareholding threshold for delisting is among the world’s highest. Some of the rules are there to protect minority shareholders from promoters, but I think there’s a way to do that and allow some of these companies to be privatised (delisted). Reforms can unlock consolidation, reward shareholders and improve companies’ access to capital, as Japan’s liberalisation has shown. It is like refreshing the farm by turning the soil.Yet, there have been some major capital-market strides. The REIT market, once non-existent, has attracted billions in capital, enabled us to bring five out of six REITs to the market and a $1.3 billion secondary sale in Knowledge Realty Trust in Aug. India is the world’s second-most liquid IPO market after the US. Greater regulatory and tax certainty remains a work in progress, but govt deserves credit for opening markets to foreign capital. Further reforms could deepen access to capital.In AI, which areas would you look at investing in?AI opportunities span data centres, neoclouds and IT services. As traditional IT work shifts to AI, firms such as Mphasis, in which we own a large stake, are becoming AI-deployment partners, helping businesses redesign workflows rather than simply adopt tools such as Claude. Energy, especially renewables, will also be critical to powering both India’s growth and its expanding data-centre infra.What risks do you see in AI investments?There is a risk of overinvestment and capital misallocation in AI, but financial commentary is too negative. Usage is surging, with tangible productivity gains. At IGI, our diamond and jewellery certification business in India, AI visualisation tools make grading 40% faster and enable each employee to process 30% more diamonds.Demand is exploding, driven by businesses and individuals using personalised AI agents, while computing capacity remains constrained by shortages of land, power, chips and capital. Unlike the ’90s telecom boom, when speculative, leveraged infrastructure outstripped demand, today’s data-centre build-out has strong demand, investment-grade hyperscalers as offtakers and little speculative construction. It is therefore financially sounder than booms seen in the past.But telecom companies did take a hit when Starlink announced its foray into telecom…AI’s biggest risk is disruption to legacy businesses, already reflected in falling software and professional-services valuations and questions over the future of billable hours. Some AI investments will fail, but the technology’s productivity gains and growth potential make significant infrastructure investment compelling.Investment in computing infrastructure can be compared to aviation, where aircraft retain value despite airline failures. Likewise, scarce AI computing capacity can be redeployed if an LLM company, software firm or hyperscaler fails. Markets may underestimate this residual value. Most data centres are backed by 15-20-year contracts with trillion-dollar-plus companies, limiting speculative, leveraged construction.You earlier spoke about risks arising from conflicts and macro factors. At the same time, many countries, including India, are seeing unrest. Do you see this impacting business?In a world connected by social media, we have seen a rise in social unrest, and I think that’s going to be more of a staple of societies going forward because organising is now much easier. Part of it is also that we have seen a sharp rise in the cost of living, energy costs, food costs and housing costs, and I think this is something govts are going to need to respond to. I think in the West, we’ve made it very difficult to build new energy, new infrastructure and new housing, and I hope there’s a push for some regulatory and permitting reform to accelerate investment in those areas. Technological upheaval also breeds anxiety, as during past industrial revolutions, while wars add to cost pressures. Hopefully, these wars will end at some point, and that should reduce pressure on prices. Economic growth is critical to getting countries through this, and countries will have to control the cost of living through fiscal discipline and low inflation.
