PAG sells GP stake to Blackstone fund

The fund, which has a corpus of $3 billion, is part of Blackstone Alternative Asset Management (BAAM) and specializes in passive minority investments in alternative asset managers. It has bought stakes in a range of private equity, real estate, and hedge fund managers.

PAG is one of the largest independent alternative asset firms in Asia, with more than $20 billion in capital under management across private equity, absolute return and real estate strategies. The firm closed its second PE fund at $3.66 billion in late 2015 and it is expected to launch a successor vehicle later this year. A $500 million China growth fund is also in the process of being raised.

“As a diversified asset manager operating in an attractive region, we believe PAG is well positioned for growth,” said Scott Soussa, head of BAAM’s strategic capital group, said in a statement. “The firm’s experienced team of investment professionals, extensive industry relationships, differentiated sourcing networks and disciplined investment approach makes it a compelling investment opportunity for Blackstone.”

PAG is not the first Asia-based multi-strategy private equity firm to sell a GP stake. In early 2016, Affiliated Managers Group (AMG) acquired a 15% stake in Baring Private Equity Asia. The senior partners at Baring retained their majority position in the business and entered into long-term commitments to the firm.

The proceeds from the transaction will be used to fund future commitments to Baring funds, improve the firm's financial flexibility and alignment between LPs and staff, and create a mechanism for the long-term inclusion of the next generation of leaders into the shareholding structure.

Speaking at the AVCJ Forum last November, Jean Eric Salata, Baring’s CEO, said that the sale of GP stakes was a sign of the industry becoming more institutionalized in Asia. Noting that all the large global firms are either listed or have some sort of outside investor in the GP, he added that an increasing number of other groups are likely to follow suit.

“At some point, I think you are going to see not all, but an increasing number of firms do this to create that equity layer that helps institutionalize, retain and motivate talent, and gives you that same ability to that with permanent capital that your competitors have globally,” Salata said. “The key is how people structure it. It shouldn’t affect the decision making, culture, and make-up of the firm.”

No details were offered as to the size of the Blackstone fund’s stake in PAG or the reasons for selling. “We welcome this investment in our business by Blackstone’s Strategic Capital Holdings Fund, and we appreciate its endorsement of PAG as a best-in-class asset manager,” said Weijian Shan, chairman and CEO of PAG. “Our focus on and commitment to creating value for the investors in PAG’s various funds will continue unchanged.”

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• Topics
• GPs
• Investments
• Asia
• PAG
• The Blackstone Group
• Weijian Shan