Only a few weeks after holding a first close, Blackstone’s Real Estate Partners Asia fund has already started acquiring property companies in Asia, as Hong Kong-listed Tysan Holdings announced yesterday that it had received an offer of HK$2.5 billion (US$322 million) from the private equity giant.
According to a report by Esther Fung in the Wall Street Journal, Tysan declared the offer from Blackstone in a stock exchange filing.
The offer from Blackstone comes as private equity players compete to buy real estate assets in Greater China after amassing record-sized funds for investment in the sector.
According to a letter sent to investors at the time of the first close in early June, the Real Estate Partners Asia fund had received US$1.5 billion in capital commitments (the fund’s capital target is $4 billion). Real Estate Partners Asia is Blackstone’s first dedicated to Asian real estate markets.
In July, Blackstone’s competitor, KKR, announced a final closing of US$6 billion for its second pan-Asian fund, and has reportedly been scouting potential real estate investments in China and other parts of Asia as it seeks to deploy that capital.
During October last year Blackstone acquired the Huamin Imperial building in Shanghai for a reported RMB 7 billion. The firm also has invested in real estate in the cities of Dalian, Nantong, and Wuhan in China.
According to the Wall Street Journal report, the Blackstone offer for Tysan is at a price of HK$2.86 per share. By market closing in Hong Kong on Monday the shares were trading at HK$2.77 per share.
Although Tysan started out as a construction subcontractor specialising in piling, it has since branched out into real estate development and owns a number of projects in China, including the residential developments, Talent Court, Tiffany Court, The Waterfront, and the Riverside in Shanghai.
Private equity investors reportedly believe real estate assets in China are currently undervalued, after shunning them in recent years. After buying the Huamin Building at a perceived discount because of the developer’s credit issues, Blackstone Chairman Stephen Schwarzman pronounced earlier this year that “there will be lots more of these opportunities” to buy distressed assets in China.