US alternative investment giant Blackstone announced today that it has acquired a minority stake in Hong Kong-based private equity firm PAG for an undisclosed sum.
The deal between Stephen Schwarzman’s 33-year-old investment firm and its new Asian-focused partner expands Blackstone’s capabilities in east Asia, in a move that recognises a string of successes by PAG, where former TPG partner and JP Morgan executive Weijian Shan serves as chairman and CEO.
“We welcome this investment in our business by Blackstone’s Strategic Capital Holdings Fund, and we appreciate its endorsement of PAG as a best-in-class asset manager,” said Shan in a statement. “Our focus on and commitment to creating value for the investors in PAG’s various funds will continue unchanged.”
PAG Pursuing Real Estate and Tech Deals in the Region
PAG, which invests in private equity, real estate and absolute return strategies in the region, last year closed on a $1.9 billion Japan-focused real estate fund and has invested over $25 billion into more than 6,700 properties across Asia, including value-add, core-plus and opportunistic deals.
Last month PAG made a loan of as much as HK$3 billion ($383 million) to HNA after the mainland conglomerate pledged a nearly 41 percent stake in the company holding a pair of property projects in Hong Kong’s Kai Tak area, and in January the investment partnership joined with Goldman Sachs to back mainland co-working startup Atlas.
The Hong Kong group is also a player in mainland tech startups, where it has partnered with Tencent on $30 billion streaming service China Music Corp and holds a majority stake in mainland online dating platform Zhenai.com. According a company statement, PAG currently has US$20 billion in capital under management in private equity, absolute return and real estate strategies.
Blackstone Makes Investment Through Alternative Asset Management Division
Blackstone is making its investment in PAG, which was formerly known as Pacific Alliance Group, through its Strategic Capital Holdings Fund, and indicates that it intends to be a passive partner in the business. The fund is part of Blackstone Alternative Asset Management (BAAM) division, and specializes in minority partnerships with leading alternative asset managers.
“As a diversified asset manager operating in an attractive region, we believe PAG is well positioned for growth,” said Scott Soussa, Head of BAAM’s Strategic Capital Group. “The firm’s experienced team of investment professionals, extensive industry relationships, differentiated sourcing networks and disciplined investment approach makes it a compelling investment opportunity for Blackstone.”
The US firm has over US$430 billion in assets under management, including investment vehicles focused on private equity, real estate, public debt and equity, non-investment grade credit, real assets and secondary funds, all on a global basis.