China Wealth Fund Sells Blackstone Stake Held Since 2007

Updated on
  • Blackstone says CIC didn’t hold shares as of Feb. 22: filing
  • Shares of Blackstone fell after IPO but have since surged

China Investment Corp. has sold its stake in Blackstone Group LP, ending an investment stretching back to before the U.S. firm’s 2007 initial public offering.

The sale, disclosed in Blackstone’s annual report released earlier this month, marks the end of CIC’s more than decade-long ownership of the firm’s shares, a partnership that was noted as an early example of China’s growing investment ambitions in the U.S. It comes at a time of increasing trade tensions between the world’s two biggest economies, as President Donald Trump signed orders for stiff tariffs on steel and aluminum and indicated more actions are potentially on the way.

The divestment doesn’t mark a complete break between CIC and Blackstone; the sovereign fund has been a long-time investor in Blackstone funds. In June 2009, CIC planned to invest as much as $500 million in hedge funds including those run by Blackstone, people familiar with the matter said at the time. Last year, in its biggest ever deal, CIC last year bought Blackstone’s European logistics property business Logicor for $13.8 billion.

Continued Relationship

“We greatly value our partnership with CIC and are grateful for their successful, long term investment in our firm,” said a Blackstone spokesman in New York. “We continue to expand this important relationship as one of CIC’s major asset managers and look forward to working closely together.”

CIC’s $3 billion purchase of a 9 percent stake in Blackstone in mid-2007 was among the wealth fund’s first investments. It has been a roller-coaster ride -- Blackstone shares plunged 89 percent from the IPO to their February 2009 trough, but have since surged almost nine-fold.

China’s wealth manager was created in 2007 to help improve returns on the nation’s foreign exchange reserves. The sovereign wealth fund’s investment in Blackstone shares was dogged by paper losses in its early years as shares of the New York-based investment firm plunged during the global financial crisis. That and a slump in other U.S. financial stocks such as Morgan Stanley at the time prompted the then-chairman of CIC to say in 2009 he didn’t “dare to invest in financial institutions.”

Blackstone said the Chinese sovereign wealth fund no longer held any shares as of Feb. 22. The sale was reported earlier today by the Financial Times, which said the stake was sold down “very gradually.” CIC didn’t immediately respond to an email sent to its press office.

CIC isn’t the only Chinese investor Blackstone has built ties with over the years. The firm led by Steven Schwarzman has done several deals with Anbang Insurance Group Co., the acquisitive firm that was seized by the Chinese government after a deal binge, and whose chairman was charged with fraud. Blackstone sold the iconic Waldorf Astoria hotel to Anbang for a record price in 2014.

— With assistance by Dingmin Zhang, and Cathy Chan

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