Blackstone’s Alexander Walsh on ‘transformational’ AI

Blackstone is taking questions today in the latest of our series of interviews with senior dealmakers on the outlook for the second half of 2023. Irien Joseph grills Alexander Walsh about generative AI, the consumer, media and leisure sectors – and more.

Next, we have some updates on a couple of take-privates, one involving Searchlight Capital Partners in financial services and the other a Xenon Private Equity-backed company making a tech play.

Big data

Blackstone is looking at some of the knock-on effects of the generative AI boom for potential investment opportunities, Alexander Walsh, senior managing director in the firm’s private equity group, told Irien Joseph.

Walsh described the tech as a “transformational moment for us all”.

“For Blackstone, AI is not new – we have been integrating data science into our business and decision-making since 2015, so naturally we’re looking at the potential benefits of generative AI both across the industry and for our portfolio companies,” he said.

“As for the investment side, more AI means more data, and more data means more storage. It’s easy to forget that AI doesn’t just consist of the software we interact with but requires vast data centres capable of handling intensive storage requirements. Just as the growth of e-commerce has brought about a boom in demand for warehouse capacity over the last two decades, we expect to see a similar phenomenon play out with AI and physical data centres.”

Walsh was speaking to Irien in the latest instalment of our interviews with top dealmakers about the outlook for the rest of the year. Walsh focuses on the consumer, media and leisure sectors – areas for which he sees several tailwinds.

Here’s a snippet:

What kinds of deals can get done today?

If you’re investing in the right sectors, you can get transactions done. The M&A market is certainly defrosting but the right conditions are needed, including a degree of stability in the market. Across the firm, Blackstone continues to focus on our high conviction sectors including logistics, data centres, life sciences and the post-covid travel and leisure rebound, which are currently benefiting from favourable tailwinds. We apply a thematic, value-disciplined approach to origination and look to back resilient companies that will thrive over the long term.

In the UK for example, when we talk about recession-resilience, we are continuing to see robust performance in the UK leisure industry, particularly with the rise of ‘staycations’. The pandemic accelerated the popularity of domestic holidays, and we believe this trend will continue – our portfolio company Bourne Leisure, which operates Haven Holiday Parks and Warner Leisure Hotels, is showing booking data remaining strong and above expectations.

Check out the full interview for more of Walsh’s thoughts, including which headwinds he sees for his sectors and the wider dealmaking environment.

Approval

Searchlight Capital Partners’ bid to take London-headquartered alternative asset manager Gresham House private at an enterprise value of £441 million ($560 million; €514 million) moved a step closer, after shareholders voted in favour of the takeover yesterday.

The next step is for a court hearing to sanction the scheme, which is expected to come in late 2023 or early 2024. If that is successful, Gresham will delist shortly after.

You can read the full details on Searchlight’s offer in this Dealflow from back in July.

Testing appetite

Xenon Private Equity-backed Microtest today announced that its offer period for RoodMicrotec will begin tomorrow and end on 27 October.

Microtest, an Italian designer and manufacturer of automated test equipment and testing services provider, in June agreed a €0.35 offer with the board of Netherlands-headquartered semiconductor supply and quality services provider RoodMicrotec. It valued the total equity of RoodMicrotec at €28.9 million.