US private equity firm Blackstone will spend at least US$200
million to buy a stake in Bluestar Group, a major state-owned
supplier of chemicals and related services, according to a source
close to the Chinese company.
The source, who declined to be named, said the state-owned
Assets Supervision and Administration Commission has given the
green light to the two companies to go ahead with the deal.
"But they still have to work out an agreement," said the source,
saying the two sides are negotiating the amount of stake and
price.
The source denied earlier reports that Blackstone would spend
US$500 million for a 30 percent stake in Bluestar.
The buzz is that Bluestar is planning its initial public
offering in Hong Kong. If the deal goes through, Blackstone - as a
large international fund - is likely to be Bluestar's strategic
investor in the IPO, said a mainland analyst of the chemical
industry who also did not want to be named.
With money from a strategic investor, observers say, Bluestar
may increase its net asset value from 2.4 billion to as much as 15
billion yuan by increasing equity ownership of its subsidiaries and
associated companies before the IPO.
The Blackstone decision was made, according to sources, "after
contacting other companies in China, not just Bluestar".
The Blackstone-Bluestar marriage would be the first deal
undertaken by the US private equity fund to buy a Chinese company
after the Chinese government took a 9.9 percent stake in it in
May.
Analysts noted that Blackstone, which had its IPO in the New
York Stock Exchange in June and opened its first office for the
Chinese market in January, has to make aggressive moves in the
market it has just entered.
Bluestar, whose parent company is China National Chemical Corp,
the largest chemical industry company in the country, holds stakes
in New Chemical Materials, Bluestar Cleaning and Shenyang Chemical
Industry.
(China Daily July 4, 2007)