Blackstone buys 40 pc of mall owner SCP

Private equity giant Blackstone has agreed to invest US$400 million for a 40 per cent stake in Shenzhen-based SCP, which owns and manages 19 shopping centres across the mainland.

"As a strategic partner, we look forward to working with SCP on further business network expansion and new acquisitions," Blackstone managing director Tim Wang said.

Wang himself refused to disclose the investment amount, but sources put the figure at about US$400 million.

Wang said Blackstone was attracted by SCP's management team, strong retail sales growth and continuing urbanisation on the mainland.

Retail sales on the mainland have grown on average by 16 per cent a year over the past decade.

In the first nine months of this year, sales increased 12.9 per cent from a year earlier to 16.88 trillion yuan (HK$21.4 trillion), 0.2 percentage point higher than the first half of this year, according to the National Bureau of Statistics.

Founded in 2003, SCP owns and manages 19 shopping centres in first and second-tier cities under three brands: Incity, SCP Plaza and One City. Its major shopping centres include SCP Plaza in Shenzhen and the Incity mall in Hangzhou.

Total sales this year were expected to grow 20 per cent to 2.8 billion yuan, said Leo Ding Liye, the chairman and chief executive of SCP.

Apart from Blackstone, Ding said ICBC International had also agreed to buy a stake in SCP, taking 6 per cent. With the two deals, the company's total asset value will surpass US$2 billion.

Ding said the investment by Blackstone would help the company raise funds, but refused to divulge if SCP was planning to list in Hong Kong.

Ding said the company would continue to expand its shopping centres, in particular the Incity brand, which caters to the fast-growing middle-income group.

Blackstone is one of the largest owners of shopping centres, with more than 110 million square feet of assets across Asia, Europe and the US.

Blackstone's investment in SCP comes primarily from its Blackstone Real Estate Partners Asia fund.

SCP has partnered a number of international financial institutions and developers. In May, global alternative asset manager Carlyle announced a strategic partnership with the company, acquiring a 49 per cent stake in Suzhou Incity mall and Hangzhou Gudun Incity mall.