Blackstone in $3.1b first close on second Asia PE fund

The first close was announced alongside the private equity firm’s first-quarter results. It said in January 2020 that Fund II would launch within the year. The overall target is $6 billion, according to Washington State Investment Board, which has committed $250 million to the new fund. The pension system invested $200 million in Fund I.

Blackstone closed the debut Asia vehicle in June 2018 at $2.3 billion, having reduced the hard cap from $3 billion. When coupled with associated commitments from the firm’s global buyout program, it brought the total equity available to invest in Asia to at least $3.8 billion.

As of year-end 2020, Blackstone Capital Partners Asia I had around $1.3 billion in uncalled capital and realizations of $160 million. The fund had generated a multiple of 2.1x and a net IRR of 40%.

Blackstone’s most recent Asian acquisition was Piramal Glass, a glass packaging business owned by Indian conglomerate Piramal Group, for $1 billion. Other buyouts in the region include Ayumi Pharmaceutical in Japan and wholesale drug distributor Geo-Young in Korea, as well as India-based Aadhar Housing Finance and Essel Propack, a consumer goods packaging business.

Last year, the private equity firm made a partial exit from Essel Propack, realizing INR18.6 billion ($253.4 million) by reducing its stake from 75% to 52%. In January, Aadhar Housing Finance filed for an IPO. It is seeking to raise up to INR73 billion, of which INR58 billion would go to Blackstone.

Speaking at the AVCJ Forum in November 2020, Amit Dixit, the firm’s head of India private equity, noted that all Asia deals have three characteristics: sector, management, and set-up (SMS).

The GP won’t look at assets outside of five sectors: technology, consumer, healthcare, financial services, and value-added industrials. The prospective investee requires strong management, either by retaining incumbents or recruiting new talent. And then close attention is paid to the set-up of the operational intervention plan, given the days of buying low and selling high in Asia are deemed past.

“It used to work in India in 2010, but India has gone from a 5-6x P/E [price-to-earnings ratio] to 18x. Take any part of Asia, it is well-discovered,” he said. “It’s not about what you buy, it’s about what you build. You need to have a plan. You can’t build everything – you must pick the right spots, where you have certain angles or operating or interventional capability. If we get the SMS right, it is very profitable.”

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• Topics
• Fundraising
• Buyout
• GPs
• Asia
• Fundraising
• The Blackstone Group