Blackstone eyes hedge funds, property in Asia

The private equity giant is ramping up investment in Asia to take advantage of softer prices, says chief executive Stephen Schwarzman.
Blackstone eyes hedge funds, property in Asia

US-based Blackstone plans to increase investments in Asia with a particular focus on property, but it will also seek hedge fund seeding opportunities, says chief executive Stephen Schwarzman.

“Prices in Asia have been, over the last few years, quite high,” he said while in Hong Kong on Friday. “We look at Asia now in a much more positive way.”

Since the start of the year, the private equity giant has increased its headcount by 20% in the region, where it now has 191 staff.

The group, which has $205 billion in AUM, is taking the view that China’s slowdown “has hit rock bottom”. While growth is expected to resume over the next two to three years, it sees an opportunity for investment in property and consumer-related industries.

Another target market is India, where Blackstone has been an “aggressive” buyer of corporations and real estate over the past year, says Schwarzman.

The firm is one of the world’s largest property investors, most recently deploying capital from its $13.3 billion global Blackstone Real Estate Partners VII fund, which closed earlier this month.

It is also among the biggest allocators to hedge funds globally, running $43 billion in its hedge fund solutions business, which seeds start-ups and runs funds of hedge funds. It is also reportedly planning a fund that will acquire stakes in hedge fund managers in the secondary market.

“We’re constantly looking for good Asian managers, because Asia overall has been the fastest growth market in the world,” says Schwarzman. “It’s an exposure investors throughout the world are looking to get more of.”

He notes that the number of money managers in Asia is low when compared to the region's market share of the world economy.

Blackstone seeded Senrigan Capital, a Hong Kong-based event-driven fund, with $100 million in 2009. It made a follow-on investment of $50 million earlier this year, despite reports that it lost about 15% in the six months to June, and it recently created a side pocket where illiquid assets were transferred from the portfolio.

Still, Blackstone’s hedge fund solutions business has ample capital to make bets on managers, having received $3.7 billion of net inflows since the start of the year, according to company earnings results.

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