In an effort to expand its operations in China, Blackstone Real Estate Partners Asia fund -- The Blackstone Group L.P.’s (BX) real estate arm -- is planning to acquire Hong Kong listed construction company, Tysan Holdings Limited. Blackstone plans to purchase Tysan for about $322.6 million (2.5 billion Hong Kong dollars). Additionally, Barclays PLC (BCS) is expected to act as an advisor for Blackstone on the Tysan bid.
Blackstone’s real estate arm was formed in 2013. Following its formation, this would be the first investment by the company’s first Pan-Asia property fund. Moreover, the company is targeting $4 billion worth of investment. Additionally, it plans to focus mainly on Australia as well as Asian countries that include China, India and Japan.
Blackstone has already made investments in the real-estate development business in various cities of China that include Shanghai, Dalian, Nantong and Wuhan.
On the other hand, Tysan Holdings is mainly engaged in the development and investment in residential properties in the cities of Shanghai, Tianjin and Shenyang. Moreover, it has a construction business in Hong Kong along with two service residence projects in Shanghai.
Earlier, between 2010 and 2013, the Chinese government had resorted to stringent rules and regulations in the housing sector. However, due to the fragile growth of the Chinese economy, the real estate sector turned into a profitable investment, thus resulting in relaxation in the real-estate rules by Chinese policy makers. Further, this led to an escalation of property prices in China. These factors made investment in China more lucrative, thereby attracting foreign investments in the real-estate sector.
Recently, UBS AG (UBS) announced its plan of entering into an agreement with the district government in Shanghai and an insurance company in order to start a public-housing investment fund. This fund would raise money from both public and private investors in an attempt to assist China to build low-cost houses.
The overseas investment by Blackstone in China is expected to further expand its operations in the Chinese territory. Moreover, this acquisition is anticipated to augment its top line and improve its financials going forward.
Blackstone currently carries a Zacks Rank #2 (Buy). In the same sector, Fortress Investment Group LLC (FIG) is also performing well with the same Zacks Rank.
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