Blackstone Opens Beijing Office

HONG KONG/SHANGHAI (Reuters) – U.S. private equity heavyweight Blackstone Group (BX.N: Quote, Profile, Research, Stock Buzz), in which China's sovereign wealth fund holds a substantial stake, said on Monday it is opening an office in Beijing and hired a former government official as its chief representative there.

Blackstone said Shan Fu will head its representative office in the Chinese capital. Fu previously was vice president of Beijing Mainstreets Investment Group, and before that worked in several government agencies including the National Development and Reform Commission (NDRC).

While foreign private equity firms such as Carlyle Group CYL.UL and Warburg Pincus WP.UL have been stepping up their presence in China, getting deals done has proven challenging, and many buyers have settled for minority stakes instead of deals for control, which they typically prefer.

“The opening of our Beijing office and the appointment of Shan further underlines our deep commitment to China and the Chinese market,” Stephen Schwarzman, chairman, CEO and co- founder of New York-based Blackstone said in a statement.

The company said it sees opportunities both in China and to join with Chinese companies doing deals overseas.

Blackstone agreed in September 2007 to buy a 20 percent stake in Chinese chemical maker China National BlueStar for up to $600 million, marking its first major investment in China. The deal won Beijing's approval early this year.

In June, Blackstone said it agreed to pay 1.1 billion yuan ($160.7 million) for a high-end commercial building in downtown Shanghai.

China Investment Corp (CIC), China's fledgling sovereign wealth fund, agreed to buy a $3 billion stake in Blackstone ahead of its IPO last year, and Blackstone has said it will look to deals with CIC in China.

Shares in Blackstone have lost nearly 41 percent since its listing.

Underscoring the difficulty of getting deals done in China, rival buyout firm Carlyle and top construction equipment maker Xugong Group Construction Machinery Co last month abandoned a plan for Carlyle to buy a significant stake in Xugong after an initial deal was struck nearly three years ago.

(US$=6.846 yuan)

(Reporting by Tony Munroe and George Chen; Editing by Anshuman Daga; tony.munroe@reuters.com)