Blackstone’s (BX) Chinese Adventure

When Blackstone’s (NYSE: BX) CEO Stephen Schwartzman launched a Chinese fund management company to raise 5 billion yuan ($732 million) from local investors, it was seen as the beginning of a expansion of Blackstone in China. The CEO sees the operation of the two funds as a means of hiring new staff and increased money inflow.

The new onshore Blackstone unit in China will focus on smaller deals in China and Chinese companies and real estate projects. Blackstone’s first investment deal in China was way back in 2007 when it secured a $3 billion loan from China’s sovereign wealth fund even before its IPO. While the timing for this was wrong and the Blackstone stock sank with the deal, the firm continued its private equity ventures and discussions with CIC, and this is how the relationship paid off. The firm struck a deal with CIC and increased its stake in Blackstone to 12.5%, increasing its poise. But nevertheless, the US continues to remain the focus of the firm, with China taking only the second place.