CIC Unlikely to Buy More of Blackstone

By Zhang Hong
Published: 2008-09-26

Translated by Lin Li
Original article
: [Chinese]

US-based private equity house Blackstone revealed that China's sovereign wealth fund, China Investment Corporation (CIC), had no immediate intention to increase stake in the company.

As the US financial crisis deepened, so had the losses experienced by Blackstone, which the CIC invested three billion dollars last year to acquire about 10% of its stakes.

The stock of Blackstone currently had dropped to around 17 dollars per share, and that led to about 1.2-billion-dollar losses on the book of CIC.

During the acquisition deal sealed in May last year, CIC and Blackstone had agreed on a limit on how much stakes the former could own in the latter. At present, the CIC had nearly reached the ceiling stakes stipulated and was unlikely to acquire more, said Blackstone CEO Garrett Moran.

Moran told the EO that the fluctuations in the stock markets were beyond one's control, and that all the company could do was to enhance returns generation.

He added Blackstone's stock had tumbled along with other financial firms in the US market under the current storm sweeping the Wall Street.

Moran believed the crisis would lead to the closure of many investment banks, and that would help to consolidate the industry, bringing about fewer but bigger and stronger financial institutions in the US.

Though the investment outlook had been gloomy, the cooperation level between the Blackstone and CIC was strengthening, said Moran, adding the two shared information, training courses and learning from each other.

With the credit crunch in the US worsening, there had been rumors and even worries that the Chinese state-backed CIC would leap on the opportunities to acquire US leading financial institutions and assets.

However, the actual buying had instead come from the likes of Barclays, Nomura and Mitsubishi.