Blackstone Inc. has increased its staff in its London office to nearly 500 people during the Covid-19 pandemic. According to Farhad Karim, Chief Operating Officer, Europe will be the best bet in delivering investment opportunities.
What is this all about?
Since March 2020, Blackstone has recruited around 200 people in London and expanded in Frankfurt, Paris, and other locations in Europe.
The recruitment spree is happening when buyout firms attract deal Makers from investment banks with lucrative offers. Blackstone, KKR & Co, Carlyle Group Inc., Ares Management Corp, Apollo Global Management Inc., and others paid an average compensation of near $ 2million per employee in 2021. The average pay at the top five U.S. investment banks was $232,000 in comparison.
According to Bloomberg News, Blackstone has been among the aggressive poachers on Wall Street. Their prominent recruits include Catherine Chiurco and Tata Morrison from JPMorgan Chase, Heather Von Zuben from Goldman Sachs, and Caroline Hill from Lloyds banking group.
Karim says that Blackstone’s talent is coming from the investment banking world. There are combined factors attracting bankers to the firm, and one of the components is compensation.
As per Bloomberg data, 2021 saw record-shattering deals worth $5.2 trilling transacted globally. PE firms alone accounted for a third of the total business, and Blackstone led with $122 billion deals. In Europe, with $22 billion takeovers deals, Blackstone was the second private equity investor behind EQT AB.
Despite political environments in Ukraine, buyout firms were busy with Blackstone executing the largest private real estate deal in Europe. Mileway, a company that cuts food and goods delivery time with its urban warehouses, saw its existing investors agreeing to a recapitalization which valued the business at $ 23 billion.
Karim, the Global General Counsel, real estate of Blackstone, does not see activity slowing down due to the Ukrainian war. According to him, if the activity level remains the same, Private Equity M&A will end in 2022, higher than 2021.
Blackstone has only one deal in Russia via Sponda, a finished real estate firm it bought in 2017, and Sponda accounts for less than 2% of Russia’s total assets.
The U.K. has a good demand for office space and logistic networks. It also has a competitive life science sector, and Blackstone is keen to build its real estate and life science platform. Another focus area is Environmental, Social, and Governance assets. PE firms have increased hiring and compensation dramatically in this sector, and Blackstone’s headcount has grown exponentially since 2019.
The hiring spree in London will require additional office space for Blackstone. There could be office space overflow before a move is considered in the short term. Blackstone office’s current lease of its Headquarters in Berkeley Squares in the Mayfair neighborhood of London expires by the end of 2027.
