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Blackstone to step up buying in Asia after raising US$9.4b

Hong Kong

BLACKSTONE Group said that it will accelerate its Asia-Pacific investments after raising a combined US$9.4 billion from two funds dedicated to the region.

The New York-based alternative asset manager will have US$15 billion to deploy to real estate, private equity and other opportunities in Asia once money from its global funds is included, according to Jonathan Gray, Blackstone's president and chief operating officer.

"The combination of underlying growth in China and India, and the opening of Japan to foreign capital gets us excited," he said, referring to the increasing willingness of Japanese entrepreneurs to accept investment from overseas private equity firms.

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As the Asia-Pacific market matures, "the opportunities for us to execute our strategy in private equity go up", Mr Gray added.

The US firm announced on Wednesday that it raised US$7.1 billion for its second Asian real estate fund and US$2.3 billion for its first regional buyout fund.

It joins global rivals such as Carlyle Group, TPG and KKR & Co, which have been raising large amounts for Asian buyouts as opportunities emerge in markets ranging from China to India and Japan.

Blackstone expects to raise the proportion of Asian investment in its total business from slightly less than 10 per cent at present, with a particular focus on opportunities in China, Mr Gray said.

"Blackstone has quietly built up a very large Asia business and has the intention to build something even bigger, going forward," he said. "Long term, given the scale of the Chinese economy, that obviously has most white space."

High prices and the large amount of buyout money chasing Chinese companies have produced an "opportunistic" approach to the market in recent years, with Blackstone on average selling more China assets than it has been buying, said Asia-Pacific chairman Chris Heady, who is also the company's head of real estate for the region. "That probably is going to change," he said, citing signs of tightening credit in China.

In January this year, Blackstone completed the acquisition of about US$200 million of non-performing loans from China Huarong Asset Management. In April, it hired Yan Yan, the former president of office developer Soho China, to pursue Chinese commercial real estate acquisitions.

The Asia real estate fund will continue to focus on acquiring logistics assets and warehouses in China, Japan, South Korea and Australia, Mr Heady said.

Blackstone has already acquired about 49 million square feet of warehouse space in Asia, mostly located in China and Australia.

Mr Heady said that the firm will look for more opportunities to acquire and take private firms with real estate holdings.

Last October, Blackstone bought two trusts that own Japanese assets: Australia-listed Astro Japan Property Trust and Singapore's Croesus Retail Trust. BLOOMBERG