Su Shimin: the king of capital to organize the next "Chinese party"

King of Capital is preparing his next "Chinese party."

Stephen Schwarzman, chairman of Blackstone Group, seems more willing to talk about scholarly projects named after him than "what is the most worthwhile investment in the industry?" In 2013, Donated 100 million U.S. dollars from his personal wealth and started "Su Shimin Scholarship" in Tsinghua University.

A year later, standing in front of the site of the Soviet Academy, this two-headed white, bright Jewish old man gestures excitedly, "Can you imagine that in October this year, there will be an eight-story building here" . He showed reporters a purple tie representing Tsinghua University. In the coming years, he will work with the top Chinese universities to cultivate a group of scholars and participate in the economic reforms promoted by the Chinese government.

Relative to Tsinghua's trip, Su Shimin's meeting with Chinese shareholders is quite low profile. On the eve of meeting with Liu Yandong, vice premier of the State Council, Su Shimin paid a visit to China National Foreign Exchange Investment Corporation (CIC), which bought a 10% stake in Blackstone before the listing of Blackstone in 2007. However, due to the outbreak of the subprime mortgage crisis , Fukui once more than 50%, due to deep set of seven years has been questioned.

Blackstone stock prices in recent years, the rebound, gradually shrouded in the cast in the shadow of Fukata. When meeting with reporters, Su Shimin has "replayed" Blackstone's performance three times: "We are the largest alternative asset management enterprise in the world. Our company manages assets of 272 billion U.S. dollars and our net profit of last year was 3.5 billion U.S. dollars, creating shareholder equity A 35% overall return ".

And his Chinese followers are more concerned with how Blackstone goes beyond a private equity fund to become an asset management public company across PEs, real estate funds, hedge funds and credit.

Surging the Chinese market

"21st Century": Is China's economic growth in a downward spiral? Does this mean that China must now adopt appropriate stimulus policies to ensure its economic growth? How fast do you think China's economic growth should be maintained?

Su Shimin: Compared with other countries, China's economic growth rate is still fast, but the growth rate has slowed down. However, the Chinese government has now realized the problem of slowing economic growth. The Chinese government has begun to introduce some plans and measures to stimulate economic growth both at the central level and at the local level. In the coming quarters, we can see the more positive effects of these stimulus measures.

I believe that China's economy will still be able to maintain the trend of continued growth. This is also a point of great concern to all. As to what speed is appropriate, I can not answer this question. I think the Chinese government and the Chinese people can solve this problem.

"21st Century": The market is worried about China's financial risks. How do you assess these risks? Is it possible for China to have a financial crisis like the United States in 2008?

Su Shimin: China is unlikely to have a financial crisis. The reserves of China's financial institutions themselves are relatively high, and most of the Bank of China's earnings are still good. From the perspective of China's banking industry as a whole, the level of reserves is much higher than that of the United States before the 2008 financial crisis. Although some businesses may suffer losses, China will not emerge as the United States in 2008 as a whole.

21st Century: You mentioned that the momentum of China's economic growth has slowed down. What impact will this have on your investment in the Chinese market? In this status quo, Blackstone is also optimistic about what industries in China?

Su Shimin: At present, everyone is a bit over-worried about the slowdown in China's economic growth. Some investors have stopped using their investment measures because they are worried about it.

In our view, the current situation should be put on a larger context and it is just a better opportunity for Blackstone. For example, we spent 539 million US dollars last year bought a software company in China - Evans Hoi Fai; In addition, we recently completed a transaction in the pharmaceutical industry, but not officially announced. There is never a bad investment opportunity in China, except that we have to make more smart and correct choices.

"21st Century": More and more mainstream investors and consumer groups grow in the mobile Internet environment, in your opinion, how will the mobile Internet affect future investment?

Su Shimin: It can be said that the mobile Internet has brought revolutionary changes in the world. This change is particularly evident in China. Some Chinese Internet companies, such as Alibaba, Baidu and Tencent, have developed very well. Alibaba also listed in the United States, has achieved great success.

In China, consumer shopping behavior has undergone great changes. In the purchase of certain categories of goods, they particularly like online shopping, shopping and avoid shopping. Changes in consumer behavior in China are most pronounced compared to the United States and other countries; moreover, China has a higher population base than any other country in the world. These two factors add up and reinforce the important business opportunities brought by the mobile Internet.

The residential market is least interested

"21st Century": Let's talk about real estate. In Blackstone global real estate market hundreds of billions of dollars in the layout, the Chinese market apparently only shared a small share. Blackstone is not optimistic about China's real estate market? why? For China's real estate market and the future of real estate PE, Blackstone what the foresight?

Su Shimin: I am afraid that the residential market is one of the areas we are least interested in. As far as the current situation in China is concerned, we think the housing market is still quite weak at the price level. In the long run, the stock of residential real estate will need further economic growth to absorb; and in the nationwide, the flow of population will continue to affect the residential real estate market. Residential real estate in various regions of China, cities perform differently, some cities may be very strong, and some cities may be more vulnerable.

However, China's real estate industry is very interesting. For example, with the large-scale development of retail and online shopping, warehouse logistics real estate is becoming an interesting real estate business. Also involved in office commercial real estate is also worth a visit.

In fact, the imbalance between the industry and the region in the real estate market in China has created interesting and valuable investment opportunities for us. We see real estate values ​​now falling in some regions and the lack of credit facilities at banks have given financial institutions such as Blackstone the opportunity to buy these properties from developers or other homeowners.

In China, a huge real estate market, many institutions seem hesitant to take any financial pressure. For example, everyone feels that the real estate industry has over-borrowed money. In fact, this time should also look at how the true real estate value, who should go to buy this asset, what their cash needs.

From the standpoint of Blackstone, we usually choose some bigger real estate projects. Maybe we do not consider the liquidity and other institutional bids because we have the advantage of capital and can take a comparatively favorable price Go buy these relatively high quality assets.

All in all, when everyone is talking about the possibility of declining real estate prices, the market is full of panic and driving everyone to sell real estate. This is a good opportunity for us to buy. If we rush to buy, instead, Think it is not a good time to buy.

Blackstone's overall expectation of China's real estate market is still quite positive, but there will be fluctuations in it. During a period of time, price shocks will cause the value of real estate to decline. After a period of flattening, it may usher in a period of upward rise. Sexual look at this market.

State-owned enterprise reform: market-oriented

"21st Century": The Chinese government is exploring the path to mixed ownership reform. How Blackstone will participate in the reform of mixed ownership of Chinese state-owned enterprises? What is your judgment and comment on the trend of reform?

Su Shimin: The reform of state-owned enterprises involves all aspects. For the direction of the reform, it is still too early to make judgments. However, what is certain is that China's large state-owned enterprises will take various reforms and may start to list some of their businesses or sell part of their assets. The reform of China's state-owned enterprises needs to be developed in a market-oriented way, but the realization of such changes will certainly take a long time.

The Blackstone Group is paying close attention to the entire process of change. At the same time, we are watching whether we can give all the help we can in the right circumstances.

"21st Century": Some domestic PE agencies are also involved in mixed reform, what are your suggestions on their restructuring? What kind of reform and direction can we adapt to globalization?

Su Shimin: We know that China has a very good reform plan in this regard and is carrying out a comprehensive financial reform. From a general perspective, China will certainly transform itself into a market-oriented and consumer-oriented economy, which will be the most important change that has taken place in the Chinese economy in the coming decade.

Multi-asset management business isolation and risk control

"21st Century": As a diversified alternative asset management platform, Blackstone is involved in many aspects of private equity, real estate, hedge funds and other businesses, how are these businesses independent of each other? Risk control is how to achieve?

Su Shimin: The separation of the business sector is actually very easy to do. We will set up different funds for different business areas, with independent and directional financing, which they decide to vote for each project, not to vote for any project.

I am often asked questions about risk management. The problem is complicated and complicated, saying that simple and easy. We all know that risk management has some basic principles, such as maximizing the diversification of asset allocation, not putting all the eggs in one basket, not over-investing in one project, and focusing on a certain area or industry.

The way you manage risk sounds pretty simple: for every investment you make, you have to do a detailed analysis of the specific investment project to see what its underlying loss factor is and where the benefits come from. The overall assessment of the development prospects, if it has a huge potential loss factor, even if it can bring you a very substantial return, do not vote for such projects.

Blackstone has such a mechanism within the body: refuse to personal investment decisions. The individual's project poses a lot of hassle and the person in charge of the project will be very upset once others blame his project for any deficiencies; our approach is that when a major investment project comes up, the various stakeholders And partners will work together to evaluate the project, analyze its strengths, risks and shortcomings; no matter who projects, the same assessment to accept everyone, there is nothing upset. For us, this risk management approach works well.

The pros and cons of PE listing

"21st Century": Listing is a hot spot in the recent PE market in China. As a good learning paradigm PE, Blackstone What can share experience? For a PE organization, what are the benefits and disadvantages of going public?

Su Shimin: "There's nothing new under the sun," and in the United States, the number of listed PE institutions has reached eight. There is no doubt that listing a PE as a public company will undoubtedly have the benefit of being listed: there is no doubt that going public will increase the size of the entire company's capital, provide good liquidity, expand its business further, engage in acquisitions of other companies, and attract more outstanding Talent came to work in this business.

It is worth mentioning that, after the listing, people more familiar with Blackstone's brand and understanding, directly enhance our awareness as a business. The benefit is that we are more confident to raise more capital for the fund as our brand name and influence improve; moreover, other companies, such as real estate developers who are familiar with our brand, are willing to have more Business contacts.

This is very helpful for the business development of Blackstone. Speaking with specific figures, the assets managed by Blackstone have tripled in size since listing in 2007; and many financial institutions have shrunk dramatically since the financial crisis of 2008-2009. For our investors, the listing is also very beneficial, they see Blackstone through the market, in more areas of business have the space to flex its muscles. Overall, going public is an excellent thing for Blackstone, giving our shareholders and employees great optimism and satisfaction.

"21st Century": private equity funds are engaged in a relatively private business, the listing will not cause trouble and block the investment in Blackstone?

Su Shimin: We did have such concerns, especially when the decision to go public in 2007, the SEC's disclosure requirements so that Blackstone must put a lot of information to the public. But so far, Blackstone has been listed for seven years, the funds we manage are very good, so that customers are very satisfied - if the trend of the entire business growth, you just said that the issue of private equity funds did not Constitute too much trouble.

"21st Century": So, what are your suggestions and comments on the PE counterparts seeking to go public in China?

Su Shimin: China's private equity fund in the end what will happen, I can not give any judgment and advice, because I know that in China have not seen too many similar Blackstone enterprises.