US private equity giant Blackstone Group is exiting its investment in Tysan Holdings by selling its stake in the Hong Kong property developer to China’s HNA Group for HK$2.62 billion ($337 million) according to a statement by Tysan to the Hong Kong Stock Exchange.
The two sides reached a preliminary agreement on the sale on March 31st, with the Chinese travel and investment conglomerate paying Blackstone HK$4.53 per share for its 66 percent stake in Tysan, or about 11 percent above the stock’s closing price on the day the agreement was signed.
The transaction, which if completed will also trigger a general offer for Tysan shares, allows Blackstone to make a 58 percent profit on the Tysan stake it acquired in 2014, after unsuccessfully attempting to take the developer private.
HNA Expands Its Real Estate Portfolio
Purchasing Tysan allows HNA, which is the parent company of Hainan Airlines to expand a real estate development business that it kicked off in 2012.
Tysan, which has residential and commercial projects both in mainland China and Hong Kong, would complement HNA’s own projects in more than two dozen Chinese cities, including Beijing, Shanghai and Shenzhen.
Under the conditions in a term sheet signed by the two sides, Tides Holdings II, the Blackstone subsidiary that controls Tysan would retain a nine percent stake in the developer following the sale.
Blackstone Selling on the Upswing
Blackstone orginally purchased its stake in Tysan with the hope of taking the developer private, however, its HK$2.5 billion ($322 million) bid was eventually abandoned in early 2014, when it failed to gain the 90 percent approval level necessary from Tysan’s shareholders to enable the private equity firm to take the real estate company private.
With its privatisation plan frustrated, Blackstone appears to held on to its controlling stake in Tysan through 2015’s real estate downturn before selling the developer off once the market for housing, and real estate shares, rebounded over the last several months. Tysan’s stock rose 65.77 percent over the last year, and closed at $4.31 per share after resuming trading today.
Before selling Tysan to HNA, Blackstone disposed of one of Tysan’s two investment properties in Shanghai to Guangzhou-based developer Country Garden last year, according to published reports.
News of Blackstone’s sale of the developer was released on the same day that the private equity firm announced that Chris Heady, formerly its head of real estate for Asia, had been appointed its new chairman for Asia Pacific.