In Full: Blackstone's Gray on India's Modi, AI Buildout

Author: Bloomberg Television · Watch on YouTube

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Original language: English

Original video: In Full: Blackstone’s Gray on India’s Modi, AI Buildout · Channel: Bloomberg Television · 07:05 · Watch on YouTube

Topics: AI infrastructure and hardware, Markets and economy

Summary

Blackstone’s Jonathan Gray says Prime Minister Modi’s optimistic message about using technology to empower people resonated with him, especially AI’s potential in health care and education. He sees India’s long-term prospects as strong despite near-term pressures on markets, the rupee, energy costs and IT services, and says Blackstone is looking for opportunities across real estate, private equity and infrastructure. Gray argues that demand for AI computing is growing faster than real-world infrastructure can be built, while investors and public markets are providing discipline. He sees substantial room for data-center and AI infrastructure growth in Asia, including India.

Key points

Gray praised Modi’s speech and its message of using power to empower, including through AI.
He cited AI’s potential to improve health care and education.
Gray attributed near-term pressure on India to elevated energy prices, currency weakness, concerns about AI’s effects on IT services, and a reset from high valuations.
Blackstone takes a long-term view of India, citing economic growth, a young population, a rising middle class and a pro-growth government.
The firm is interested in AI infrastructure, data centers, neocloud, health care, education, financial services, travel, energy and infrastructure.
Gray said Blackstone invests across real estate, private equity and infrastructure, and has taken 14 Indian companies public over time.
He sees strong demand for AI computing, while supply is constrained by practical requirements including chips, power, entitlements and capital.
Gray acknowledged that excesses can occur during new technology booms, but said the current AI infrastructure cycle differs from the telecom boom.
He said data-center capacity in Asia outside China remains small relative to demand and views cautious investors and delayed public offerings as signs of market discipline.

Chapters

Start	Chapter	Summary
00:00	Modi’s speech and AI’s potential	Gray praises Modi’s optimistic message and highlights AI’s possible benefits for health care and education.
01:08	India’s market pressures and long-term outlook	Gray discusses energy costs, currency and valuation pressures, while explaining why Blackstone remains optimistic about India.
02:43	Blackstone’s investment themes in India	Gray outlines the sectors and investment approaches Blackstone is pursuing, from data centers and health care to real estate and infrastructure.
04:17	AI infrastructure demand and investment discipline	Gray describes growing demand for AI computing, the slower pace of infrastructure supply, and why he sees the current cycle as different from the telecom boom.
06:31	Data centers and compute demand in Asia	Gray says Asia outside China remains far from meeting compute demand and views cautious markets as a healthy constraint on excess.

Quotes

to use power to empower — 00:00

these are the moments where it’s more attractive to enter. — 02:11

the supply side, which is governed by the real world, by gravity and chips and the need for power and entitlements and capital, that’s moving much more slowly. — 05:24

This looks and feels very different. — 06:00

this demand for compute will continue. — 07:05

Concepts and entities

Blackstone, Jonathan Gray, Narendra Modi, Hock Tan, Broadcom, AirTrunk, infraestrutura de IA, data centers, mercados privados

Full transcript (original language)

00:00 I wanted to get your take first of how it felt like in that room during that speech. Was there anything from the prime minister that really resonated with you? Well, Yvonne, it was a, I think, a terrific speech. It was very optimistic. It was about growth in the future, and he had this message about, to use power to empower, which I think in this world today, particularly as we’re grappling with this new technology, is an important message. I think this AI can be used as a force for good, particularly

00:35 when it comes to things like health care, lifting up education for people all around the world. So that message for me from the prime minister really resonated. Obviously, Blackstone has been, investing in India for two decades now. Jonathan, you yourself have talked about being, you know, the opportunities. It’s India being the one that has delivered very good returns for Blackstone. But coming at a time when we see, you know, a very different picture across public markets, right, when equity markets continue to struggle, of course, we just saw

01:08 the historic defense of the rupee from the central bank, biggest moves we’ve seen since the twenty thirteen taper tantrum. How do you square the disconnect, it seems, that we’re seeing across private and public markets now in India? Well, there are a couple of different sort of cross currents going on here. Obviously, energy prices being elevated, have hurt the Indian economy, have hurt the currency. You also had, you

01:40 know, some concerns around the AI impact on IT services companies here in India. And I would say India coming off sort of eighteen months ago, two years ago, had very strong valuations, very high multiples. So there, there’s been a bit of a reset. But as investors, we take a long term approach, and we look at an economy that is growing seven plus percent a year, has a very young population, a rising middle class, government that’s pro

02:11 growth, and we see a place that has a lot of opportunity. And so I think as investors, these are the moments where it’s more attractive to enter. You know, people tend to like to follow the crowd. For us, we take a slow and steady approach. We find great businesses in the right sectors, invest in them, and here in India try to build those companies. So I I think when you look at the prospects of this country over time, even if there are near term headwinds, they remained incredibly bright.

02:43 And Blackstone itself has talked about doubling your AUM in India to to over a 00,000,000,000, I believe, in in the next few years. I mean, your your your portfolio now is really kinda evenly split between real estate and private equity. How do you see this mix evolving as you w a… Your AUM here? Yeah. Look. As… We try to identify themes, neighborhoods we really like, places like AI infrastructure,

03:15 data centers, neocloud, the rising middle class, which I’ve talked about where you where you see things like health care and education, financial services, travel. Those are areas we like. And you can express those through companies. You know, we own a stake in one of the largest hospital chains here. We also own one of the biggest mall companies here as well. We’ve taken 14 companies public over time. There’s a lot of liquidity on the backside when we

03:47 invest in businesses in India. But, again, it’s in themes we like, infrastructure, energy, given the enormous needs around both AI as well as what’s happening in the underlying country and its growth. So it’s this long term approach that we take, try to identify sectors we like, and then express it in real estate, in private equity, and infrastructure. That’s been a good formula for us. And, Jonathan, I mean, you guys are one of more active investors when it comes to

04:17 this whole AI infrastructure build out globally now. I’m just wondering, just given the warnings that we’ve been seeing from the likes of Hock Tan, from Broadcom about, you know, AI investors and the, you know, the rising cost of capital could be the key constraint in this AI build out. Do do you share those concerns in in any way, or do you worry that private capital is… Are are chasing the same sort of assets and and and compressing your returns? Well, I think there is enormous need and demand for compute. If you think about it

04:50 from a supply demand standpoint, we’re seeing at our companies around the world a real desire to use AI to make their businesses better, to serve their customers, to make a lease application process at a rental housing company 90% faster, to make visualization techniques at a garage door opening business much better. We’re seeing all these use cases, and now we’re seeing it with individuals with these personalized tools, muse and instinct. And so we’re seeing usage go up

05:24 into the right. And yet the supply side, which is governed by the real world, by gravity and chips and the need for power and entitlements and capital, that’s moving much more slowly. So I think there’s still a lot of balance, and most of what we do in this space is long term lease infrastructure to some of the biggest companies in the world. So, yes, will there be accesses? There always are in a moment where there’s an exciting new technological breakthrough. But in aggregate, when I look back at this versus other periods

06:00 of access like the telecom boom where people built supply ahead of demand, where there was a ton of leverage. This looks and feels very different. So we’re very disciplined as a firm where we’re deploying capital, but we think focusing on the AI infrastructure here in India and around the world is the right place to be. Do do you see those same sort of concentration risks in in in Asia? Particularly, I know you’ve done a lot of data center deals, in this part of the world as

06:31 well. Well, we have a company Airtrunk here, which is the biggest data center player. We have a neo cloud company here in India, NASA. It’s much earlier in the development here. If you look at the number of gigawatts in Asia outside of China, it’s still very, very small. So I think we’re a long way from meeting the underlying demand for compute that exists. So I I don’t see any kind of imbalance. And if anything, the markets are providing even more discipline. As you know, a

07:05 number of the public offerings out there have had to be delayed. Investors are cautious. And so to me, that’s a healthy sign. It stops from things getting out of hand. But in the long term, I think this demand for compute will continue. And, therefore, if we’re able to aggregate capital the way we are, chip financings as well, energy, all of that is gonna be critical to take this technology forward. And I do think the technology is gonna be powerful in its impact.