Blackstone’s co-founder goes to China

Michael Bow
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Steve Schwarzman tells Michael Bow about how he’s fostering relations with Beijing

BEIJING’S imposing Great Hall of the People is usually the baroque home of China’s political elite. But its floor has temporarily been handed over to Steve Schwarzman, the co-founder of Wall Street titan Blackstone and officially the 57th richest man in America.

The 66-year old, who last week announced booming quarterly profits of $628.3m at Blackstone, is here to roll out a gilded new $300m scholarship endowment, based on the famed Rhodes Scholarship. It is launching at Beijing’s prestigious Tsinghua University and bequeathed with his name.

For a man famed for his laser-guided focus on deal making – he was made partner at Lehman Brothers’ M&A shop at just 31 – Schwarzman is surprisingly sanguine, perhaps due the lateness of the hour in the Chinese capital.

“I’m hanging in there,” he laughs, speaking to City A.M. by telephone.

Backed by a heavyweight line up of top political operators, ranging from former US adviser Henry Kissinger to ex-Prime Minister Tony Blair, the Schwarzman Scholarship, as it will be known, is part educational initiative, part geo-political diplomacy.

“The purpose is to try and interfere in a positive way with the potential difficulties between a fast growing economy like China and the developed world,” Schwarzman says. “Watching another country move ahead quite rapidly usually leads to frustration on the part of the slow growing countries.

“If that ends up creating trade tensions, trade war, military issues, then that’s a very bad potential situation. The objective of starting this programme is to introduce people to China in a specialised way”

Though China’s growth has slowed, Schwarzman says it is neither unexpected nor strange for it to go down a gear. “If you were the second largest economy in the world growing at 7.5 per cent to eight per cent, most people would find that an unimaginably high level,” he says.

Regarded as one of the finest dealmakers of his generation, Schwarzman has a contacts book to rival the best globetrotting statesman. However, despite a history raising mega billion buyout funds in his day job at Blackstone, Schwarzman is yet to reach the $300m endowment target.

BP gave us $25m which was terrific, Caterpillar and Boeing were great, General Electric, JP Morgan – the people were lovely.” he says.

“The biggest problem with fundraising is that people have other charities they’re doing in China. I underestimated how charitable foreign companies were in China. If that weren’t the case, I could have wrapped this up frankly in three or four months.”

President Obama and Chinese leader Xi Jinping sent letters endorsing the plan at yesterday’s launch. Kissinger appeared on video. “Henry basically loves this programme,” Schwarzman says. “It was really quite a remarkable thing for me to be at the centre of these two biggest countries in the world,” he adds. “A very unusual thing.”

1969: Graduated from Yale and joins investment banking firm, Donaldson, Lufkin & Jenrette

1972: Graduated from Harvard Business School

1978: Elected managing director at Lehman Brothers

1977 - 1984: Worked in Lehman’s M&A business

1984: Made chairman of Lehman’s Mergers and Acquisition committee

1985: Left to set up Blackstone with co-founder Peter Peterson

2007: Floated Blackstone on NYSE