Pattern Recognition_Blackstone

Pattern Recognition

Insights from the World’s Largest Alternative Asset Manager

February 16, 2024

Data Center Demand Is Growing in India

By Joe Zidle
  • The transition to a digital world and the explosion of AI are driving a need for data centers worldwide.
  • India has only 52% internet penetration among its citizens (versus 92% in the US). This, coupled with a low cost of data, has led to an exponential increase in data consumption.1
  • Despite rapidly growing tech adoption, India’s data center capacity is still a fraction of leading global markets.
Data center stock comparison
(MW / million population)

Source: datacenterHawk, JLL (1H 2023 Datacenter Outlook), Structure Research, World Bank. MW / million population is computed based on national population estimates. Data is based on third party operators and does not include self-build data centers by firms.

  1. Internet in India Report (2022), DataReportal Digital Report (2022), (2023), Nokia Mobile Broadband Index (2023)
  2. Represents Frankfurt, London, Amsterdam and Paris which are primary data center hubs in Europe. Population for FLAP is represented by Germany, Netherlands, France and United Kingdom.

December 20, 2023

A New Boom in US Manufacturing

By Joe Zidle
  • US private manufacturing construction is up 72% from a year ago, with 71% currently focused in the south and west.1
  • Every durable manufacturing job creates nearly 9 related jobs—a tailwind for these regions, which are already experiencing strong growth in population, jobs and wages.2 
  • More broadly, $110 billion in new clean energy investments have been announced due to recent government incentive programs, with an additional $910 billion for manufacturing and infrastructure projects.3
  • We see these trends continuing to benefit demand for investments in the energy transition, as well as commodities, logistics, storage and transportation. 
Total US Private Manufacturing Construction Spending
($ in billions; seasonally adjusted annualized rate) 

Source: US Census Bureau, as of 10/31/2023.

  1. US Census Bureau, as of 10/31/2023. Data reflects value of private construction put in place for manufacturing. 
  2. Economic Policy Institute, as of 1/23/2019. 
  3. Data reflects announcements since the IRA, CHIPS Act, and IIJA were enacted ($36 billion in announced investments and $74 billion in commitments for clean energy projects, and $356 billion in announced investments and $554 billion in commitments for manufacturing and infrastructure projects). 

December 5, 2023

With Increasing Risks, Size & Scale Matter

By Joe Zidle and Jonathan Bock
  • Larger companies are often well-positioned for elevated rates and growth challenges.
  • Companies with EBITDA of under $50 million have historically defaulted at more than five times the rate of companies with EBITDA of over $100 million.1 
  • We believe lending to larger companies is one important way for private credit managers to protect capital today. 

Read more from Joe Zidle and Jonathan Bock on private credit.

Average Quarterly Covenant Default Rate
  1. As of September 30, 2023. The “Lincoln International Private Market Database,” also known as the Lincoln Valuations & Opinions Group (“VOG”) Database, is a quarterly compilation of over 4,750 portfolio companies from a wide assortment of private equity investors and non-bank lenders. Most of these companies are highly levered with debt financing provided via the direct lending market and in many instances, Lincoln estimates the fair value of at least one senior debt security in the portfolio companies’ capital structures. In assessing the data, VOG relies on commonly accepted valuation methodologies and each valuation analysis is unique and conforms to fair value accounting principles. The analyses are then vetted by auditors, fund managers and their board of directors, as well as other regulators. © 2023 Lincoln Partners Advisors LLC. All rights reserved. Third party use is at user’s own risk. Average Quarterly Covenant Default Rate represented as the average quarterly share of companies in the Lincoln International proprietary database that have breached at least one covenant for the period June 30, 2018 through September 30, 2023, which is the full sample for which data is currently available. Average quarterly covenant default rates for companies with fewer than $50 million in EBITDA and greater than $100 million in EBITDA were 12% and 2%, respectively, in the noted time period. 

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Opinions expressed reflect the current opinions of Blackstone as of the date of publishing only and are based on Blackstone’s opinions of the then-current market environment, which is subject to change. Certain information contained in the content discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.

Certain information and data provided in this content are based on Blackstone proprietary knowledge and data. Portfolio companies may provide proprietary market data to Blackstone, including about local market supply and demand conditions, current market rents and operating expenses, capital expenditures, and valuations for multiple assets. Such proprietary market data is used by Blackstone to evaluate market trends as well as to underwrite potential and existing investments. Additionally, certain information contained in this content has been obtained from portfolio companies and/or sources outside Blackstone, such as press releases, reports, websites, and/or articles, which in certain cases have not been updated through the date hereof. While such information is believed to be reliable for purposes used herein, no representations are made as to the accuracy or completeness thereof and none of Blackstone, its funds, nor any of their affiliates takes any responsibility for, and has not independently verified, any such information. There can be no assurances that any of the trends described herein will continue or will not reverse. Past events and trends do not imply, predict or guarantee, and are not necessarily indicative of, future events or results. 

This commentary does not constitute an offer to sell any securities or the solicitation of an offer to purchase any securities. This commentary discusses broad market, industry or sector trends, or other general economic, market or political conditions and has not been provided in a fiduciary capacity under ERISA and should not be construed as research, investment advice, or any investment recommendation. Past performance is not necessarily indicative of future performance.