Blackstone makes first move in China

Leading private equity firm Blackstone Group will spend $600 million for a 20 percent stake in China National BlueStar (Group) Corp, the parent of BlueStar said yesterday. From People's Daily

The deal with the chemical maker marks Blackstone's first investment in China since it started exploring the Chinese market at the beginning of the year.

Blackstone will buy the stake from BlueStar's parent company, China National Chemical Corp, or ChemChina, which will hold the other 80 percent of BlueStar after the deal.

"We believe China's sustained economic growth will support long-term growth of China's chemical industry," Antony Leung, chairman of Blackstone Greater China, said yesterday.

Leung, former Hong Kong financial secretary, has been leading Blackstone to make aggressive moves in China since he assumed the new position nine months ago.

Earlier in June, the yet-to-be-established state foreign exchange investment company, which will have $200 billion in initial funding, made its first investment by spending $3 billion to buy a 9.4 percent stake in Blackstone.

In July, the private equity firm successfully brokered a deal for China Development Bank to spend $3 billion to purchase up to 3 percent of the stake in global bank Barclays.

The deal has helped propel Blackstone to the No 5 position in the M&A advisory charts for China so far this year, according to data consultancy Dealogic.

Blackstone will appoint Leung and Ben Jenkins, both senior managing directors in Asia, to BlueStar's board, the company said yesterday.

Ren Jianxin, president of ChemChina, said he believes Blackstone has sufficient investment experience in the chemical industry in view of its investment in chemical makers Celanese and Nalco.

Bluestar, meanwhile, is planning a dual listing in Hong Kong and Shanghai, local media reported earlier.

The company has three listed companies including New Chemical Materials, BlueStar Cleaning and Shenyang Chemical Industry. These companies have suspended share trading since September 6.

Merrill Lynch & Co advised Blackstone on the BlueStar transaction while UBS AG had advised China National Chemical in the deal.