Bank of America Securities 2026 Financial Services Conference: Blackstone CFO Michael Chae on Macro, Fundraising, Private Markets Growth, and AI Strategy

Key Takeaways

TL;DR: BX enters 2026 w/ record AUM ($1.3T), robust deployment ($138B in 2025), and strong fundraising ($239B inflows in 2025, +40% YoY). Management expects continued strength in management fee growth, transaction activity, and net realizations, underpinned by secular trends in AI/data infra, power/electrification, private credit, and private wealth. BX leverages AI as both investment theme and ops tool, w/ early margin benefits. Private credit and RE seen as key opps; software credit risk manageable. BX set to benefit from industry consolidation, scale, and product innovation, especially in private wealth/retirement channels.

1. Macro & Portfolio Fundamentals

• Operating Environment:
  • "Despite all the noise...operating environment for our firm and portfolio fundamentals are quite strong."
  • +9% revenue growth in corp PE cos in Q4 2025, resilient margins.
  • AI & Infra: Exceptional gains; US data center platform QTS saw +50% re-leasing growth in 2025, similar trends expected 2026.
  • Consumer: K-shaped recovery; high-end strong (lux hotels, premium travel, card data), low-end weaker (econ hotels, water parks).
  • Inflation: Under control; labor costs stable, labor market balanced/cooling, shelter inflation below lagging CPI.
  • CEO Sentiment: Highest optimism in 1yr+; "virtually none expect recession in next 12mo."
  • Cap markets: Robust; HY/IG spreads at/near historic tights; expect short rates to come down.

2. Deployment & Investment Themes

• 2025 Deployment:
  • $138B deployed (4yr high), incl. $42B in Q4 2025.
  • 8 public-to-private deals in 2025 (RE & PE).
  • Record deployment in credit/secondaries.
• 2026 Outlook:
  • Expect another "very active year" w/ robust deployment.
• Key Megatrends:
  • AI & Digital Infra:
    • Data center CapEx to 3.5x in 5yrs; $7T req.
    • BX: "largest platform globally," aims to be "most trusted partner to hyperscalers."
  • Power & Electrification:
    • Sector CapEx to grow +50% in 5yrs.
    • 31 investments, $10B+ equity last 2yrs.
    • Recent sale: majority stake in Sabre (early electrification play).
  • Life Sciences:
    • $200B+ annual R&D funding gap; BX well-positioned to fill w/ private capital.
  • Private Credit:
    • $30T market opp; still early penetration.
    • BX platform: liquid credit, direct lending, infra, asset-based finance, RE debt.
  • Secondaries:
    • Private markets AUM doubled to $13T in 7yrs; <2% annual turnover = "huge opp."
  • Asia:
    • 40% of world econ, but only ~8% of private market AUM; BX sees major growth runway.

3. Fundraising & Growth

• 2025 Fundraising:
  • $239B inflows (+40% YoY).
  • Institutional inflows +50% YoY; individual channel +50% YoY; insurance +20% YoY.
• 2026 Outlook:
  • Drawdown fundraising in 2026 to be "well above 2025."
  • Infra AUM +40% YoY to $77B.
  • BXMA: 23 straight Qs of positive performance; best organic net inflows in ~15yrs in 2025.
  • Credit (BXCI): Record institutional inflows; IG biz +50% YoY.
  • Insurance: AUM $270B (4x in 5yrs); largest non-captive insurance AM globally.
  • Private Wealth:
    • Crossed $300B AUM in Q4 2025 (3x in 5yrs).
    • PE strategy for individuals at $18B in 2yrs; infra strategy among largest after 1yr.
    • BREIT: 8.1% net return in 2025; "as optimistic as we've been in years" on demand.
• Industry Consolidation:
  • Growth/flows accruing to large-scale players; scale, data, brand critical.
  • BX can expand organically/capital-light; not reliant on M&A.

4. Financial Performance & Outlook

• 2026E:
  • Mid-teens base management fee growth in 3/4 segments in Q4 2025; strong 2026 trajectory.
  • PE: 5 new drawdown funds ($50B+) to be launched/fully fee-earning by YE.
  • Private Wealth: Early days, but "significant engine" for management fee/FRE growth.
  • Credit: Strong momentum; significant dry powder.
  • BXMA: Fee-earning AUM +14% entering 2026.
  • Transaction Fees: Strong yr expected for cap markets biz.
  • Perpetual Capital: Now ~half of firm-wide fee-earning AUM; drives management/incentive fee growth.
  • Net Realizations: Transaction environment improved; expect significant cyclical recovery benefits.
• 2027E:
  • Full-yr benefit from 2026 drawdown funds.
  • Anticipate "very significant" incentive fee crystallization in institutional infra (2024: $1.1B; 2027 expected "quite substantial").

5. Private Wealth & Retirement Channel

• Market Opp:
  • $140T global market, low single-digit private market penetration.
  • Four core strategies (BCRED, BREIT, etc.) = $160B+ AUM; foundational for next growth phase.