Blackstone Halfway To Goal On China Fund

The Blackstone Group has raised more than 2.5 billion yuan ($390.7 million) for its first yuan-denominated fund, a source close to the effort said.

The tally puts the New York-based firmm which has raised more than $34 billion since its founding in 1985, and manages more than $158 billion in assets, more than halfway to meeting its goal of raising 5 billion yuan ($780 million) for the fund.

Blackstone was the first among its peers to launch a yuan-denominated fund in 2009. The firm invests in the country through offices in Beijing, Hong Kong and Shanghai.

Since then, rival private equity firms The Carlyle Group and TPG Capital, along with merchant banking groups at Morgan Stanley and Goldman Sachs have all started their own yuan-denominated funds. All together, these firms are trying to raise more than 21 billion yuan, or more than $3 billion.

Competition for investors, deals and personnel is fierce. Blackstone recently hired Yi Luo from Carlyle as a senior deal-maker in China as it continues to build its Asia team. Carlyle announced in July it had raised 3.2 billion yuan so far for its fund.

The fund-raising progress comes amid concerns that China’s tenacious growth is showing signs of strain, with Chinese stocks ending at an almost 15-month low on Oct. 6.

Still, private equity executives remain confident in China’s long-term growth.

Blackstone President and COO Tony James said at the Dow Jones Private Equity Analyst Conference in New York last month that he expects the Chinese economy to continue growing at a 7 percent annual rate, citing “good fundamentals.”

Blackstone Group reportedly landed its first exit from a real estate investment in China recently, selling its stake in Shanghai’s Channel 1 shopping mall to Hong Kong’s New World Development Co for 1.46 billion yuan ($229 million). The firm, led by Steve Schwarzman, also invests out of a general buyout fund of more than $16 billion.