China's CIC exits Blackstone stake

Financial details of the transaction have not been disclosed, but Blackstone said in its annual report that as of February the sovereign wealth fund no longer held any shares in the firm. Speaking to Reuters, representatives of the firm said CIC will continue to partner with Blackstone in real estate and hedge funds, as well as on direct deals.

CIC initially invested in Blackstone in 2007 as the firm was preparing for its IPO, paying $3 billion for 101 million non-voting common shares, a 9.3% stake. The following year CIC raised its holding to 12.5%. The sovereign wealth fund has sold down its stake gradually over subsequent years. As of February 2017, it held 54.5 million shares.

The Blackstone investment was CIC's first in a US-based asset, excluding Treasury bills. At the time Blackstone CEO Steve Schwarzman called it a “paradigm shift in global capital flows.”

Blackstone and CIC pursued a number of partnerships beyond the initial investment, particularly in the first few years. Initiatives pursued by the firms include the purchase of Morgan Stanley’s Japanese distressed asset portfolio in 2011 and an investment in a $1.4 billion commercial real estate portfolio owned by the Royal Bank of Scotland the same year.

CIC’s exit from Blackstone comes amid rising tensions between the US and China. President Donald Trump vocally criticized Chinese trade policies during his campaign and is set to enact tariffs on steel and aluminum imports. The president has indicated that future barriers could follow if other countries retaliate by placing restrictions on imports of US goods.

Trump’s tensions with China have also created difficulties for investors trying to do business in the US. Several deals have been blocked on national security grounds.

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• Topics
• Greater China
• North America
• Open market
• GPs
• China
• USA
• CIC
• The Blackstone Group
• Exit
• Sovereign wealth fund