During a fireside chat moderated by Morningstar CEO Kunal Kapoor, Blackstone president and chief operating officer Jon Gray outlined why private markets are becoming increasingly accessible to individual investors and addressed growing concerns around fundraising, valuations, AI-driven concentration risk, and the future of software investing.
The institutional playbook comes to retail investors
Historically, private equity, private credit and infrastructure investments were largely reserved for institutional investors and wealthy individuals due to high minimum investment requirements and limited liquidity.
As access to private assets expands, individual investors in Europe and the US are increasingly being encouraged to adopt the long-term allocation strategies used for decades by pension funds, endowments and sovereign wealth funds. “Their duration is not that different […] they're saving for a retirement over decades or to pass on wealth,” Gray said.
Gray noted that for more than four decades, pension funds, endowments and sovereign wealth funds have typically allocated more than a third of their portfolios to private markets to enhance returns and diversify risk—benefits that are increasingly available to individual investors.
Blackstone rejects fundraising slowdown narrative
Kapoor questioned whether the industry's growing focus on retail investors reflects slower fundraising from institutional clients, a challenge that has affected many private-market firms since higher interest rates reduced deal activity.
You have institutions that don't value things properly and that creates a crisis of confidence
Gray countered that argument by noting that Blackstone raised $70bn evenly split between institutional and retail investors. He argued that Blackstone's scale provides a competitive advantage through a proprietary data ecosystem that informs investment decisions across 275 portfolio companies and 13,000 real estate assets.
Valuation practices may be private markets’ weak link
Asked what could undermine confidence in private markets, Gray pointed to valuation practices. "You have institutions that don't value things properly, and that creates a crisis of confidence," he said. To support Blackstone's valuation approach, he noted that the firm recently sold nearly $40bn of real estate assets at prices above their carrying values.
Gray argued that transparency is also a priority. For instance, the firm’s non-traded Business Development Corporation (BDC) prospectus includes “six bold bullets talking about lack of liquidity” on the very first page to manage investor expectations.
Concentration risk looms over AI boom
Addressing concerns about the concentration of value creation around AI infrastructure and hyperscale technology companies, Gray said Blackstone seeks to mitigate risk through long-term contracted cash flows. In Blackstone's data centre investments, 95% of capital is typically not deployed until 15-year leases have been signed with multi-trillion-dollar companies.
Despite a generally “favourable backdrop” for the global economy—noted by 10% revenue growth in private equity portfolio companies and cooling wage growth—Gray admitted that “picking individual names and industries is getting harder” due to the disruptive nature of AI.
AI forces software industry reinvention
Regarding the software sector, which has seen significant “rerating” of multiples, Gray added some perspective. “When Amazon emerged 25 years ago, you could have easily said every retailer was going to get blown up.” Although many retailers—including Toys R Us, Kmart and Sears—went bust, others, including Walmart and Costco, thrived.
Gray argued that software companies with deeply embedded products and strong customer relationships can adapt to the AI era, much as leading retailers adapted to the rise of e-commerce.
Blackstone is pushing portfolio CEOs to abandon traditional "seat-use- or hourly-use-based” revenue models in favour of agent-based models to survive the AI transition.
