Blackstone in talks to buy China plastics firm
SHANGHAI/TOKYO (Reuters) - U.S. private equity firm Blackstone Group BG.UL is in talks to buy into China's Guofeng Group, the country's biggest plastics products manufacturer, two sources familiar with the situation said on Wednesday.
New York-based Blackstone has been in talks with Guofeng Group, based in the eastern Chinese province of Anhui for several months, though no deal has been signed yet, the sources said.
If successful, the deal would be Blackstone's first major investment in the world's fourth largest economy, where rivals such as Carlyle Group CYL.UL and Bear Stearns Cos. BSC.N, have collectedly invested billions of dollars.
Guofeng Plastic 000859.SZ, the flagship domestically listed arm of Guofeng Group, confirmed a Reuters report in a filing with the Shenzhen Stock Exchange that its parent company Guofeng Group was in talks with Blackstone about a potential cooperation.
"In order to make the company stronger and bigger, Guofeng Group has the intention to gain suitable strategic investors," Guofeng Plastic said in the statement.
Blackstone's Antony Leung was recently invited by the Hefei city government in Anhui to visit Guofeng Group, it said.
"So far, Guofeng Group hasn't talked to any other institutions and it is not sure whether Blackstone and Guofeng will move on to further discussion and cooperation," it added.
Blackstone became active in China after it opened its Hong Kong office in January and hired Leung, who was financial secretary of Hong Kong from 2001 to 2003, as a senior managing director and chairman of Blackstone Greater China.
One source said Leung was the chief negotiator on behalf of Blackstone in the potential deal, which could be finalized soon.
"Blackstone may be little-known to Chinese but officials in the provincial government of Anhui know Antony Leung very well," said a Chinese fund source with knowledge of the talks.
"Private equity deals depend on relationships" in China, said the source, adding that the Anhui government has a positive view on the potential investment from Blackstone.
The source expected that the deal could be worth 10s of millions of dollars, including a proposed joint venture to make biofuel-related products, if it goes ahead.
Blackstone declined comment, while officials at Guofeng were not immediately available for comment.
DEAL COMPETITION
Guofeng Group, established in 1984, has total assets of over 5 billion yuan (US$646.6 million) and more than 5,000 staff. The company plans to grow into biofuel areas including biodiesel, according to its company Web site (www.guofeng.com).
Shanghai-listed shares in Guotong Tube (600444.SS), which is controlled by Guofeng Group, closed 6.18 percent higher at 10.14 yuan, while Guofeng Plastic was suspended for trade on Wednesday.
Industry-wide Asian private equity funds under management rose by 30 percent to $158 billion last year, with new funds raised for the region up by 35 percent to $32 billion, according to the Asian Venture Capital Journal.
Some private equity managers have complained that increasing global competition for Chinese deals could make investments in the fast growing economy, which is highly regulated, far more expensive in the next few years.
In October Guofeng was selected to provide plastic tubing material for the construction of stadiums to be used for the Beijing Olympics 2008, the company said on its Web site.
($1=7.733 Yuan)
