Blackstone CEO: "Capital Gains Tax Increase Presents Huge Opportunity for Alternative Investment Firms"

"Tax-Burdened Business Owners Likely to Sell Companies"
"Rising Corporate Value Also Motivates Company Sales"
"Wage Increases May Prolong Unfamiliar High Inflation"
Avoids Cryptocurrency Questions, Says 'Will Leave It to Musk'"

Steven Schwarzman, CEO of Blackstone
Photo by Reuters-Yonhap News

[Asia Economy Reporter Byunghee Park] Steven Schwarzman, CEO of Blackstone, the world's largest private equity firm, said that the increase in capital gains tax in the United States will be an explosive growth opportunity for alternative investment firms like Blackstone. He said this as business owners fearing the tax hike would rush to sell their companies.

Schwarzman participated as a panelist in the Qatar Economic Forum held via video conference and mentioned the possibility of a capital gains tax increase next year, saying, "People want to sell their assets before taxes go up significantly."

U.S. President Joe Biden is pushing a multi-trillion-dollar infrastructure investment bill and plans to secure funding for it through tax increases. At the end of last month, President Biden unveiled a revenue plan to sharply raise the capital gains tax from the current 20% to 39.6% for individuals with capital gains exceeding $1 million on assets held for more than one year.

Schwarzman said that business owners burdened by the tax increase will come forward to sell their companies, resulting in a flood of good deals. He said, "This is a tremendous opportunity for us, and what we need to do is remain cautious while preparing very exciting growth plans."

In fact, earlier this month, Blackstone, along with other private equity firms Carlyle and Hellman & Friedman, agreed to acquire U.S. medical supplies company Medline through a leveraged buyout for about $34 billion. The Medline acquisition was recorded as one of the largest leveraged buyout deals ever. A leveraged buyout refers to acquiring a company by borrowing funds based on the assets of the company being acquired.

Bloomberg previously reported that the Mills family, the owners of Medline, sold their stake due to concerns over the increase in capital gains tax.

Schwarzman said it was not just about taxes. He explained that the significant increase in corporate value is also a strong motivating factor for selling companies.

Schwarzman emphasized, "The U.S. economy is really on fire," adding, "The growth of almost everything exceeds the expectations of nearly everyone."

This is interpreted as pointing out that the Federal Reserve's strong liquidity supply policy combined with the government's multi-trillion-dollar fiscal policy has sharply increased the value of most assets. Schwarzman also expressed concerns about inflation as a side effect of the rapid increase in money supply.

Schwarzman said Americans may face sustained and high inflation beyond the levels they have been accustomed to. Regarding this, he said wage increases are the most worrisome. Because workers who have already received a lot of money due to government stimulus measures are reluctant to return to the workplace, wages could rise significantly.

Schwarzman pointed out, "It is very difficult to cut wages once they have gone up," suggesting that inflation could rise more than expected due to wages.

Schwarzman did not answer questions related to cryptocurrency. He simply said, "I'll leave that to Elon Musk."

This content was produced with the assistance of AI translation services.