Blackstone has cut stake in ChemChina unit to below 10 percent: Reuters

(Reuters) — U.S. private equity firm Blackstone Group has reduced its stake in a key unit of state-owned China National Chemical Corp (ChemChina), by more than half to less than 10 percent, two people with knowledge of the situation told Reuters.

Blackstone spent about $600 million to buy a 20 percent stake in China National Bluestar (Group) Co Ltd in 2008. It was the U.S. private equity firm’s first China investment.

But it slashed its investment in early 2014, selling shares to some Chinese investors, these people said, without disclosing the identity of the buyers or any financial details. The sale has not been previously disclosed.

Bluestar, established in 1984 by ChemChina Chairman Ren Jianxin, is a unit of ChemChina focusing on specialty chemicals. In 2011, it bought Norway-based silicon producer Elkem for $2 billion.

A spokeswoman for Blackstone in Hong Kong said the company declined to comment on its investment in Bluestar as this was a minority purchase in an unlisted company.

A China National Bluestar spokeswoman said she had no knowledge of the transaction. A spokesman for ChemChina did not respond to requests for comment.

One of the sources said that Blackstone did not book a loss when it exited the stake, but added that the partial sale was prompted by “little prospect of value appreciation without an IPO (initial public offering) plan.”

The sources declined to be identified as the information is not public.

Private equity firms usually exit an investment after five to seven years, as they need to return money to investors.

Stock market listings are a common way for private equity companies to turn a private company investment into cash.

Earlier this month, ChemChina was part of a consortium that agreed to buy German industrial machinery maker KraussMaffei Group.

The firm last year also spent 7.3 billion euros ($7.92 billion) to acquire Italian tyre maker Pirelli.
ChemChina also is reportedly in discussions to buy agrochemical company Syngenta AG.

Beijing-headquartered Bluestar has 58 factories and research and development facilities and distributes in more than 200 countries.

Blackstone was the first strategic investor brought in to ChemChina by Chairman Ren, who wanted to grow the government-owned chemicals giant into a global firm with top-notch management.