Blackstone raises $9.4 bn for Asia realty, PE funds

Blackstone Group said it has raised about $9.4 billion for two new funds — the largestever fund dedicated to real estate investments in Asia as well as its first private equity (PE) fund for the region.

The funds add to a massive industry-wide pool of money for Asian acquisitions and investments, with investors attracted by rapid economic growth compared to other major markets. It raised $7.1 billion for what it called its second regional “opportunistic” real estate fund. Growing urbanisation and rising incomes, particularly in China and India, have boosted investor appetite for shopping malls, warehouses and other property assets. “The size of this fund... gives us flexibility to pursue a range of opportunities and commit capital with speed and scale,” Ken Caplan, global co-head of Blackstone Real Estate, said.

Blackstone’s real estate business was founded in 1991 and has about $120 billion in capital under management. The portfolio includes hotel, office, retail and industrial properties in the US, Europe, Asia and Latin America.

Its first Asia-focused property fund, which closed in 2014, raised $5.08 billion.

The Asian private equity fund closed at about $2.3 billion, Blackstone said, adding that it now has at least $3.8 billion to invest in Asia equity when "associated commitments” from its global buyout fund are counted.

Roughly two-thirds of the private equity fund, as well as the contribution from its global fund, will be used to invest in China and India, said one person with direct knowledge of the matter, declining to be identified as details of the investment plans were not made public. The fund will focus on buying controlling or significant minority stakes in sectors such as healthcare, high-end manufacturing and services, as well as goods and services geared to consumers who want to upgrade their lifestyles, people familiar with the plan told Reuters last year.

Blackstone opened its real estate division in India in 2007 and signed its first transaction in 2008, when it bought a minority stake in management firm Synergy Property Development Services. Blackstone has invested around $5 billion across 30 real estate investments, of which $3.7 billion is in office space. It has built a portfolio of 78 million sq ft with its partners.

Asia private equity deals have increased in size following corporate restructuring and as global funds become more established players in markets such as China, India and Japan. Rival Carlyle Group is set to close its biggest Asia private equity fund at $6.5 billion, Reuters reported last month, after other global groups including KKR & Co raised fresh capital. Hong Kongbased private equity firm PAG is planning a new Asia fund that aims to raise as much as $6 billion.