Blackstone: China Attractive in Global Crisis

SHANGHAI (Reuters) – Blackstone Group LP (BX.N: Quote, Profile, Research, Stock Buzz) will not slow its investment in China despite the global financial crisis, as high economic growth and low valuations promise good returns, the private-equity firm’s greater China chairman Antony Leung said on Monday.

“With the financial crisis, the valuations in China will be more attractive, but it’s really the growth that we’re going after,” the former Hong Kong financial secretary told a conference in Shanghai.

New York-based Blackstone, about one-10th owned by China’s sovereign wealth fund, is actively looking for deals in the country’s property sector, which is set for growth over the next 20 to 30 years, Leung said.

Blackstone, which manages private equity, real estate and hedge funds, posted a third-quarter loss of $509 million, reflecting the credit squeeze and the falling value of its investments.

Chief Executive Officer Stephen Schwarzman said last week that the company was still in an extremely strong financial position and that the best time to invest was now, as new opportunities emerge in places such as Asia.

“When we invest, we don’t have specific plans about when to pull out. Nor do we intend to buy at the bottom, which is impossible to predict,” Leung said.

Blackstone will invest up to $600 million for a 20 percent stake in Chinese chemical maker China National BlueStar and has acquired commercial property in downtown Shanghai.

Leung on Monday defended the $3 billion pre-IPO investment in Blackstone by China’s sovereign wealth fund, China Investment Corp (CIC). The investment has lost almost 80 percent of its value.

“I believe when China or Chinese companies start to go out, they shouldn’t only look at short-term financial returns, but should seek to improve their competitiveness strategically,” he said.

Blackstone shares slumped to $6.50 in New York last Friday, down nearly 10 percent on the day, compared with the $29.61 per share that CIC initially paid.

CIC intends to raise its stake to 12.5 percent from 9.9 percent by purchasing Blackstone shares on the open market, a source familiar with the matter said last month.

By Samuel Shen
(Editing by Edmund Klamann) (samuel.shen@reuters.com; +86 21 6104 1789; Reuters Messaging: samuel.shen.reuters.com@reuters.net))