* Funding pressure creating investment opportunities in
* Blackstone expects significant amount of real estate
investments in China
* SCP malls tap China's growing middle class consumers
By Stephen Aldred and Donny Kwok
HONG KONG, Nov 4 Blackstone Group LP
agreed to pay about $400 million for a stake in Chinese shopping
mall group SCP Co Ltd, a source with direct knowledge of the
deal said, marking the U.S. private equity firm's largest
investment in shopping malls in Asia.
China's banks are facing increased regulatory scrutiny on
their lending criteria, putting pressure on small and mid-sized
real estate firms to tap alternate funding sources. That is
creating opportunities for private equity firms to invest in
China's property sector, where they see strong growth potential.
Blackstone is buying a 40 percent stake in Shenzhen-based
SCP, while ICBC International Holdings, a unit of Industrial and
Commercial Bank of China Ltd, is acquiring a 6
percent share, SCP said in a statement on Monday, without
disclosing any financial details.
The source declined to be identified as the financial
details of Blackstone's stake was confidential.
The Blackstone deal would take private equity investments in
China's real estate sector to about $1.2 billion, 53 percent
more than last year's total, according to Thomson Reuters data.
"Urbanisation, rising wages and an emerging middle class are
all intact and will continue to grow over the medium term, and
that will be supportive of not just the mall sector, but other
real estate asset classes as well," said Christopher Heady,
Blackstone's Hong Kong-based head of Asia real estate.
Heady emphasized that SCP's malls tap China's growing middle
class consumers, rather than buyers of luxury brands.
SCP will hold assets totalling in excess of $2 billion after
the deal, according to the company.
Unlisted SCP currently manages 19 shopping malls, with
tenants including Wal-Mart Stores Inc, Uniqlo and Chow
Tai Fook Jewellery Group Ltd. It has also partnered
with Carlyle Group, Morgan Stanley and China
Resources Vanguard on separate projects.
Blackstone is the world's biggest private equity real estate
firm with $69 billion in assets under management. It invests in
Asia from a $13.3 billion global real estate fund. But the bulk
of the SCP investment will come out of its first Asia real
estate fund, targeted to raise up to $4 billion.
In August, Blackstone's real estate arm offered to buy Hong
Kong-listed construction firm Tysan Holdings Limited
for $322.6 million.
New York-headquartered Blackstone, founded in 1985, had $248
billion in total assets under management at the end of
September, up 21 percent year on year.
Blackstone's real estate holdings account for 65 percent of
its latest earnings, while private equity contributed 13