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Blackstone benefits from CDB-Barclays' deal

(Reuters)
Updated: 2007-07-25 11:18

US-based private equity firm Blackstone Group appears to have killed three birds with one stone by selling a nearly 10 percent stake to China for $3 billion in May.

Not only did it find a wealthy new investor and position itself for deals in the world's most populous nation, but also the deal raised the profile of its M&A advisory business by leading to a highly visible role of advising the Chinese government on the acquisition of a stake in Barclays.

In doing so, Blackstone links its name to what is likely to be the year's biggest deal -- the sale of Dutch bank ABN AMRO. Barclays has used the investment from China to help increase its bid to 67.5 billion euros ($93.26 billion) in a battle with a rival group led by the Royal Bank of Scotland.

Blackstone's presence in China and its links with the government look set to give it a slice of M&A advisory business in a country flush with $1.33 trillion in foreign exchange reserves, and which has made no secret of its plans to diversify its portfolio of foreign holdings.

"Blackstone now, in a short period of time, can present itself as having a credible global network," said John Studzinski, head of its corporate and mergers and acquisitions advisory group. "We think we add value (as an adviser) on any international transaction."

The Barclays deal has helped propel Blackstone to number five in the M&A advisory league tables for China so far this year, according to data consultancy Dealogic. Studzinski's former bank, HSBC, is ninth.

The mandate also comes as private equity firms try to branch out of leveraged buyouts amid fears the lending environment that fuelled the boom in the past few years may be about to cool. Blackstone's shares, for example, have fallen by about a quarter since its listing last month.

The private equity firm also opened an office for its buyout unit in Hong Kong in January and hired a new senior managing director and chairman for greater China.

Barclays too is hoping to get a boost from the deal on Monday for China Development Bank to invest in the British bank.

CDB says it will not team up with any other major overseas bank, and Barclays says the deal will give it unprecedented access to Chinese clients.

"The most interesting thing is that the China Development Bank made the decision to do this in a very short time," said Studzinski. "Which tells you that when presented with strategic opportunities, the Chinese can be very disciplined, yet nimble and quick at decision-making."


(For more biz stories, please visit Industry Updates)



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