BLACKSTONE SEEKS OVER US$3B

US asset manager to focus on China, India, Southeast Asia and South Korea

BLACKSTONE Group LP is seeking to raise up to US$3 billion (RM12.8 billion) in its first Pan-Asia buyout fund for investments in sectors including high-end manufacturing and healthcare, say sources.

The firm has informed its limited partners about the plan and it aims to lock in the first tranche of investment for the fund by the end of this year, said the sources.

The size of the fund has not been finalised and could be more than US$3 billion, said a source.

The fund will focus on buying controlling or significant minority stakes in sectors such as healthcare, high-end manufacturing and services, and the socalled consumer upgrade sector — goods and services geared to consumers who want to upgrade their lifestyles, said another source.

“The fund will mainly look at China, India, Southeast Asia, Australia and Korea, and could be planning to invest in Japan as well,” the source said, adding that Blackstone’s global private equity fund will also contribute around 40 per cent to the investments that the Asia fund makes. The asset manager is the latest major US private equity player tapping regional capital for buyout funds.

Last month, KKR & Co closed a new Asia-focused buyout fund after raising US$9.3 billion, a record for the region.

Buyout firm TPG Capital Management was seeking to raise more than US$4 billion for an Asia-focused fund, Reuters reported last September. The firm has yet to announce the completion of the fundraising.

Eighty-three Asia-focused private equity funds have closed new fundraising so far this year, scooping up a combined US$32.5 billion so far this year, nearly 80 per cent of the US$42.5 billion raised for all of last year, according to data provider Preqin.

Asia-focused funds have struggled for strong returns in recent years though. Preqin data shows funds that started investing in 2014 had an 8.1 per cent median net internal rate of return (IRR), and funds from the previous year had achieved a 11.1 per cent median net IRR.

Returns above 20 per cent are considered a reasonable return for private equity funds. Reuters