Blackstone, the US private equity firm, is to make its first investment in China after striking a deal to acquire a minority stake in a chemicals maker for up to $600m.
The group is to buy a 20 per cent stake in China National BlueStar from ChemChina, the state-owned giant, although the deal is subject to regulatory approval.
The deal, announced on Monday, marks the first mainland investment involving Antony Leung since he was hired this year as Blackstone’s first chairman for greater China.
Mr Leung, a former Hong Kong financial secretary, has already brokered two landmark China investments in 2007.
The first involved convincing Beijing to pay $3bn for non-voting shares in Blackstone ahead of its initial public offering, while Mr Leung later advised China Development Bank on its initial $3bn investment in UK-based Barclays.
In a brief statement, Blackstone said its deal with ChemChina represented a “strategic partnership to build a global leader in the specialty chemical industry”.
ChemChina was advised by UBS and Blackstone was advised by Merrill Lynch.
As part of the deal, Mr Leung and Ben Jenkins, a senior executive of Blackstone Asia, will join the BlueStar board.
Mr Jenkins told the Financial Times: “The global chemicals sector is one Blackstone understands and likes because we see it as a play on global growth. We identified BlueStar as a market leader with tremendous growth potential.”
BlueStar operates chemicals, auto and food divisions, and controls three listed and more than 10 non-listed units. Its products are used in electronics, mobile phones and building materials.
Blackstone aims to use its networks to help BlueStar expand and integrate its overseas operations, which bulked up last year with the acquisitions of two companies in France that make animal nutrition and silicone products.
The deal is expected to be the first of many on the mainland for Blackstone, as it seeks to catch up with rivals such as Carlyle Group, which has been investing in China since the 1990s.
Blackstone is likely to seek to invest in sectors where it has built up global expertise, including technology, financial services and real estate.
However, foreign private equity groups have recently struggled to invest large amounts of money in China, as Beijing tightens the regulations on overseas investment in response to nationalist concerns that domestic firms are being sold too cheaply.
Carlyle has battled for 18 months to secure regulatory approval for its planned investment in Xugong, the mainland’s largest construction machinery maker.
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