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Blackstone multi-manager fund takes minority stake in Hong Kong-based PAG

Private equity firm first Asia investment for Blackstone’s US$3.3 billion fund

PUBLISHED : Tuesday, 27 March, 2018, 11:26pm
UPDATED : Tuesday, 27 March, 2018, 11:26pm

Blackstone has made a minority investment in Hong Kong-based alternative investment manager PAG through a fund that invests in several managers globally.

The investment through Blackstone’s Strategic Capital Holdings Fund, a multi-manager fund, in PAG, which has more than US$20 billion under management, has brought the fund’s investments to eight globally. The stake in PAG is the fund’s first investment in Asia.

The investment in PAG comes on the heels of two other minority investments that the US$3.3 billion fund has made this month – it has also invested in New York-based Kohlberg and Company, and the Boston-based global real estate manager, Rockpoint Group.

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Neither Blackstone nor PAG disclosed any further details about the investment. But sources close to the company said Blackstone’s fund typically makes minority investments of between 15 per cent and 25 per cent in underlying alternative investment companies.

PAG’s private equity business focuses on large-scale buyouts, although it also makes minority investments. Its investment portfolios include companies such as Chinese online used car auction operator Chezhibao and US printer maker Lexmark International, among others. In Asia, it is also a leading real estate investment manager, having invested more than US$21 billion across 6,500 properties in the region.

In recent years, PAG has also expanded its investment into China technology start-ups, with investments in Chinese online dating site Zhenai.com. It has also invested in China Music, the online music streaming company that subsequently merged with Tencent’s QQ Music and is expected to launch an initial public offering this year.

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Blackstone’s Strategic Capital Holdings Fund was raised at the end of 2013 and is part of the US private equity company’s hedge fund solutions, and has about US$75 billion in assets under management. Apart from private equity, the fund also invests in hedge fund companies such as Magnetar Capital Partners and Marathon Asset Management.

Unlike investing by single manager funds, some industry players say multi-manager funds offer the benefits of diversification across manager styles and across asset classes.

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