‘Blackstone, a 20-billion fund for Europe’

Twenty billion dollars. That is the firepower that Blackstone, the global giant in alternative investments, could deploy in the coming years to invest in European companies and strengthen its presence on the continent. And Italia is set to play a key role. Shaping the American group’s strategies is Michele Rabà, recently appointed Head of European Private Equity at Blackstone, following a career that saw him work at Apollo and, before that, at Goldman Sachs in London, where he began his career twenty years ago. The resources at its disposal are substantial. “If we consider Blackstone’s various global private equity funds focused on the United States and Europe as a whole, we are talking about a total of around 70 billion dollars. Applying an investment rate of 20–30 per cent, in line with previous years, this means we potentially have between 15 and 20 billion dollars available to invest in European companies. Part of these resources will also be channelled into Italia, where there is a significant need for capital across various sectors,” explains Rabà. This indicates the group’s continued interest in the Italian market – where it has been present for over 20 years under the leadership of Andrea Valeri, the long-standing Chairman for Italia – which has already been the focus of investments totalling over $18 billion. “Italia remains a strategic market. It is the third-largest economy in the Eurozone and we do not have a pre-set target: we assess opportunities as they arise. Over the last four years, the country has enjoyed a degree of political stability to which investors were not particularly accustomed. There will be new elections next year, but for investors, stability is a fundamental factor.’ There is, of course, no shortage of challenges. Italy’s economic growth, as in the rest of Europe, remains modest, and the country continues to grapple with structural problems, starting with high public debt, which limits the government’s scope for action. But it is precisely in this scenario, according to Rabà, that there may be growing scope for private investors. “There are situations in which entities such as ours can contribute to growth and help bridge certain investment gaps. We have excellent relations with the institutions and are already partnering with various institutions and families on a number of initiatives. We believe that collaboration between private and public capital can be a key driver for the country’s development.”

Blackstone’s interest in Europe forms part of a macroeconomic landscape which, despite geopolitical tensions, has proved more resilient than expected. ‘The European economy has shown significant resilience. Despite a succession of shocks, from wars to tensions in the energy markets, with the price of oil even rising above $100, the economy has continued to perform well. Many expected Europe to be riven by deep divisions and difficulties, but reality has shown a resilience exceeding expectations,” observes Rabà. What makes the European market particularly attractive is, above all, the enormous capital requirements that still need to be met. The report on European competitiveness authored by Mario Draghi highlighted an investment requirement of around 750 billion euros per year. “There are entire sectors where investment has fallen short of what is needed. I am thinking of the energy transition, security of supply, defence and digital infrastructure, starting with data centres. But also sectors in which Europe has a long-standing tradition, such as travel, hospitality, hotels and leisure. There is also a significant need for physical infrastructure, from road networks to rail networks.’ This is an area in which Blackstone is already active. The group, in fact, also has investments in the motorway sector through its infrastructure fund. The group’s financial strength enables it to undertake deals on a scale that is largely out of reach for most investors. For a single transaction, Blackstone could put up to 4–5 billion dollars of equity on the table, reaching even greater scales through the involvement of co-investors.

“There are several sectors that we consider particularly interesting. One is certainly the defence sector, in which we have developed significant expertise and in which we are already active in Europe, including Italia.” The sector is regarded as one of the most promising, particularly in light of the new geopolitical landscape and Europe’s growing need to strengthen its strategic autonomy. Blackstone has already invested in the sector, for example through its investment in the German company Quantum Systems. But the strategy is not limited to defence. Another key focus is on re-industrialisation, driven by technological innovation and automation. “We are also paying close attention to industrialisation, technology, innovation and robotics – all drivers that can help transform production processes. We also already have a global presence in the data centre sector, a market set to benefit from the growing demand for digital infrastructure.”

The group’s portfolio of interests remains, however, broad and diversified. Blackstone has operated in the consumer and luxury sectors, having previously invested in Versace in Italia, and has been involved in the pharmaceutical sector through its deal with Angelini. In the entertainment and gaming sector, another significant transaction was the merger between Cirsa and Lottomatica. Beyond the availability of capital, the group’s real strategy is to intervene in companies to accelerate their growth, including through industrial transactions and mergers. The key word is value creation.

“Our aim is not simply to invest capital, but to create value over the long term. That is why we often seek to build partnerships with entrepreneurs, supporting companies on their paths to growth and transformation. The merger between Cirsa and Lottomatica is a concrete example: today, Cirsa’s EBITDA has doubled compared with when we first invested in the company.” But where does Blackstone’s investment capacity come from? The group operates through various platforms, with global funds specialising in different strategies. It is a complex system which, taken as a whole, provides access to an exceptionally large pool of capital. “In Europe, Blackstone’s private equity funds are all global. The Flagship Private Equity fund is a $21 billion fund, focused on traditional private equity transactions. Then there is Core Private Equity, with capital of around $8 billion.” Added to these is the platform dedicated to the energy transition, which has raised $8.7 billion. Finally, there is the evergreen private equity strategy, managed in Europe primarily by Rabà, with assets under management of around 30 billion. These figures illustrate the scale of the challenge Blackstone is preparing to take on in the European market. And, above all, they explain why Italia – with its need for capital, its infrastructure requiring development and an industrial sector seeking new financial partners – could become one of the American giant’s key markets.