21 May 2007 at 10:22:21 AM
China has agreed to acquire a $3 billion stake in the U.S. private-equity firm Blackstone Group. The deal marks the country's long-anticipated move to expand how it invests its huge foreign-exchange reserve.
The transaction calls for China's upstart state investment company to buy nonvoting shares in the buyout company, concurrent with Blackstone's highly anticipated initial public offering of its management division, which is expected to raise up to $4 billion. The IPO was announced earlier this year, though no date has been set for its debut on the New York Stock Exchange.
China's stake will mark the first time that the country's government has sunk cash into a foreign private-equity firm. The Chinese government had been set to shift some of its foreign-exchange reserves of more than $1 trillion into other currencies because of the sluggishness of the dollar.
"We hope this is an important first step in broadening the capital flows between China and the U.S.," Blackstone's chairman and co-founder, Stephen Schwarzman, said in a statement.
Under the terms of the agreement, the Chinese investment company will own no more than a 10 percent interest in New York-based Blackstone. It also agreed to hold its investment for four years, and after that can only divest $1 billion per year, a Blackstone spokesman said. The transaction also restricts China from investing in competing private-equity firms for a year.
Here's wikipedia on the Blackstone Group.
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