Mumbai:
Blackstone Group, in which China''s first state overseas investment agency recently
bought a $3 billion stake, will acquire a 20 to 40 per cent stake in chemicals
company China National BlueStar (Group) Corp for up to $500 million. The
acquisition will mark Blackstone''s first major investment in mainland China, the
world''s fastest-growing major economy. Sources
said the two sides are finalising talks and an agreement is likely to be signed
within days. BlueStar
is a unit of China National Chemical Corp, a major Chinese chemicals maker with
annual sales of 30 billion yuan ($3.98 billion), it said on its website. BlueStar
has more than 70 subsidiaries, including research institutes and holds stakes
in three domestically-listed firms - Blue Star Cleaning Co, Blue Star New Chemical
Material, and Shenyang Chemical Industry. China
Bluestar is also expected to seek a market listing next year. This would give
Blackstone a platform to expand both domestically and overseas. China
Bluestar, part of state-owned China National Chemical Corp, has been among the
more active Chinese companies in buying international firms, and now owns a former
Courtaulds textiles factory in Grimsby. Blackstone''s
investment in China comes at a difficult time for private equity deal-makers because
the credit crunch has made it harder to finance leveraged transactions. Blackstone,
which is being advised by Merrill Lynch, is expected to gain a number of seats
on the board as part of the transaction, sources added. The
deal will also be a landmark for Blackstone, which earlier this year negotiated
an agreement to sell just under 10 per cent of itself to a new state investment
vehicle being set up by China''s government. That
deal, which cost Beijing $3 billion, was expected to provide Blackstone with a
better chance of securing deals on the mainland, where foreign private-equity
groups have found buyouts difficult to pull off. Carlyle,
which has been waiting almost two years for regulatory approval for an investment
in Xugong Machinery, an industrial group, is among those to have suffered setbacks
in China. The
opposition from Chinese officials to takeovers of companies in "strategically
important" industries has prompted private equity firms to examine minority
investments and other means of deploying their capital. Blackstone
raised $4.13 billion in its initial public share offer in New York in June, the
largest US IPO since 2002. It has also taken part in some of the largest leveraged
buyouts ever, including the purchase of Chicago-based Equity Office Properties
Trust for $23 billion and the $17.6 billion buyout of Freescale Semiconductor.
It also owns Michaels Stores and Pinnacle Foods, maker of Duncan Hines and Vlasic
pickles brands.
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