Blackstone plans to step up buying in Asia after raising US$9.4bil
HONG KONG: Blackstone Group LP says it will accelerate its Asia-Pacific investments after raising a combined US$9.4bil from two funds dedicated to the region.
The New York-based alternative asset manager will have US$15bil to deploy to real estate, private equity and other opportunities in Asia once money from its global funds is included, according to Jonathan Gray, Blackstone’s president and chief operating officer.
“The combination of underlying growth in China and India and the opening of Japan to foreign capital gets us excited,” Gray said in an interview, referring to the increasing willingness of Japanese entrepreneurs to accept investment from overseas private equity firms.
As the Asia-Pacific market matures “the opportunities for us to execute our strategy in private equity go up,” he added.
The US firm announced yesterday it raised US$7.1bil for its second Asian real estate fund and US$2.3bil for its first regional buyout fund. It joins global rivals such as Carlyle Group LP, TPG and KKR & Co, which have been raising large amounts for Asian buyouts as opportunities emerge in markets ranging from China to India and Japan.
Blackstone expects to raise the proportion of Asian investment in its total business from slightly less than 10% at present, with a particular focus on opportunities in China, Gray said.
“Blackstone has quietly built up a very large Asia business and has the intention to build something even bigger going forward,” said Gray. “Long term, given the scale of the Chinese economy, that obviously has most white space.”
High prices and the large amount of buyout money chasing Chinese companies have pro- duced an “opportunistic” approach to the market in recent years, with Blackstone on average selling more China assets than it has been buying, said Asia-Pacific chairman Chris Heady, who is also the US firm’s head of real estate for the region. “That probably is going to change,” he said, citing signs of tightening credit in China.
Blackstone in January completed the acquisition of about US$200mil of non-performing loans from China Huarong Asset Management Co and in April hired Yan Yan, the former president of office developer Soho China Ltd, to pursue Chinese commercial real estate acquisitions.
The Asia real estate fund would continue to focus on acquiring logistics assets and warehouses in China, Japan, South Korea and Australia, Heady said.
Blackstone has already acquired about 49 million sq ft of warehouse space in Asia, most- ly located in China and Australia.
Heady said the firm would look for more opportunities to acquire and take private firms with real estate holdings.
In October, Blackstone bought two trusts that own Japanese assets: Australia-listed Astro Japan Property Trust and Singapore’s Croesus Retail Trust.
Another priority is the purchase of Japanese apartment buildings, primarily in Tokyo and Osaka, according to Heady.
Even though it’s the first time Blackstone has raised a dedicated Asian buyout fund, the firm has invested about US$3bil of equity in the region from its global fund in the past five years, mainly in China and India, said Ed Huang, head of the private equity business for Greater China. It will have US$3.8bil to invest in Asian buyouts by tapping the global pool along with the US$2.3bil in the new regional fund.