Blackstone $135-billion bet on the U.K. is raising eyebrows
A package of investments from U.S. firms into the U.K. was unveiled during White House leader Donald Trump’s state visit to Britain, with Blackstone’s mysterious commitment now raising eyebrows. As the likes of Microsoft , OpenAI and Nvidia pledged to pump a collective $202 billion into the U.K. ., Blackstone promised the biggest individual investment. On Wednesday evening, it was announced by the British government that the company had made a forward capital commitment of £90 billion ($121.5 billion), which would build on a previously announced £10 billion to be allocated to data center support. In dollar terms, the total commitment from Blackstone will be just shy of $135 billion, at current exchange rates. “We expect to invest in over £100B of UK assets over the next decade,” a Blackstone spokesperson told CNBC by email on Friday. “This includes investments in companies, real estate, infrastructure and private credit.” ‘Ripple effect’ for UK market While it’s unclear which specific companies or projects Blackstone might add to its portfolio, Mark Preskett, senior portfolio manager at Morningstar Wealth, told CNBC that global investors were likely to take note of Blackstone’s major interest in Britain. Although Preskett said Morningstar viewed the U.K. as one of the “more attractive destinations” for investment capital, he agreed that this was not the consensus among market participants. “It is very much a contrarian play, if you judge market sentiment to the U.K. on investor fund flows, which are extremely weak,” he explained by email on Friday. “Blackstone’s pledge is a significant vote of confidence in the U.K. market and investments in areas like real estate, private credit and infrastructure could create ripple effects, potentially drawing in additional inflows and highlighting the U.K.’s position as an attractive place to invest.” Investor sentiment toward the U.K. has been dampened in recent years by Brexit , a stalling economy , political turmoil , and longstanding questions about the country’s public finances . Figures published by the U.K. government in May revealed that foreign direct investment into Britain fell drastically in 2023, tumbling to £1.3 billion from £22.9 billion the previous year. IPO fundraising on the London market weakened to a 30-year low in the first half of this year, in the latest blow to the U.K. capital. Dan Coatsworth, investment analyst at AJ Bell, told CNBC on Friday that Blackstone’s investment in the U.K. had the potential to entice further capital flows back into the country. “Blackstone clearly sees big opportunities in the U.K. and that sends a positive signal to the broader business community,” he said via email. “Big investments can lay the foundations for creating hubs, acting like a magnet to draw in companies with similar interests.” Words of caution However, AJ Bell’s Coatsworth also suggested that investors shouldn’t expect Blackstone’s capital commitments to rapidly transform the outlook for Britain. “Blackstone intends to invest a significant amount of cash, but it’s not clear where all this money will be deployed,” he told CNBC. “The £100 billion investment plan is also spread across a 10-year period, so there won’t be a sudden boom of activity.” Duncan Edwards, CEO of BritishAmerican Business, told CNBC’s “Squawk Box Europe” on Thursday that it remained to be seen exactly how much of the money pledged actually made it to Britain. “It’s been a pretty flawless 24 hours … from a U.K. government perspective — they couldn’t really have asked for a better slew of announcements coming over the last three days,” he said, referring to the collective package which included Blackstone’s £100 billion commitment. ″[But] you have to have a little bit of caution about the numbers. You know, promised dollars, famously, are not the same as actual dollars. So you just need to watch what happens over the next months and years to see what actually gets committed of the announcements that have been made.”
Source – CNBC
