Blackstone seeking at least US$5b for second Asia fund

[HONG KONG] Blackstone Group is doubling down on Asia, seeking to raise at least US$5 billion for its second private equity fund focused on the region, people familiar with the matter said.

The US investment firm has started marketing the new vehicle to potential investors, according to the people, who asked not to be identified because the information is private. It's targeting more than double the size of its first Asia buyout fund, which closed at about US$2.3 billion in 2018.

Blackstone is raising ever-larger pools of capital as dislocations from the coronavirus pandemic offer up more deal opportunities. President Jon Gray has vowed to increase the proportion of Asian investment in its total business, which stood at just under 10 per cent two years ago.

The firm joins KKR & Co, which is in the process of raising at least US$12.5 billion for its next Asia fund. TPG, Warburg Pincus and Baring Private Equity Asia have also in recent years raised large amounts of money earmarked for investment in the region.

Blackstone could increase the size of its latest vehicle depending on the level of demand in the coming months, the people said. A Hong Kong-based spokeswoman at the firm declined to comment.

The buyout giant is betting global managers' appetite for Asia will continue to increase as the region experiences a faster recovery from the pandemic than rest of the world. Deal flows have started to pick up and could accelerate going into 2021, as a number of transactions halted amid the spread of Covid-19 are expected to come back.

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China's economy continued to recover in the third quarter as gross domestic product expanded 4.9 per cent, keeping it on track to be the world's only major growth engine. Growth in India is projected to rebound 8.8 per cent next year, after contracting 10.3 per cent in 2020, according to an International Monetary Fund forecast.

As it now raises new cash, about 66 per cent of its 2018 fund has been invested so far, the people said. Blackstone is pursuing transactions in Japan, Australia, Korea, and less mature markets like China and India where acquisitions for control account for only one-third of total deal-making, one of the people said.

Many of Blackstone's existing holdings are in the consumer, healthcare and technology industries, which have benefited this year from the shift to online consumption and increased demand for medical services.

In August, it agreed to buy Takeda Pharmaceutical Co's over-the-counter drug business for 242 billion yen (S$3.1 billion), its largest private-equity acquisition in Japan.

Last year, Blackstone invested in Indian mortgage lender Aadhar Housing Finance and South Korean pharmaceutical distributor Geo-Young.

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