Blackstone Makes First China investment
From Elaine Nichols
http://elitewatch.911review.org/Blackstone_Group.html
Blackstone makes first China investment
BEIJING - The Blackstone Group, partially owned by China's state foreign-exchange investment company, will invest up to US$600 million in a Chinese chemical corporation, its first move into China, the US private-equity firm said on Monday.
China National Chemical Corp (ChemChina), a leading international diversified chemical company, and the Blackstone Group announced a strategic partnership to build a global leader in thespecialty chemical industry, the two companies said in a joint announcement.
The Blackstone Group will acquire 20% of China National Bluestar Corp, a wholly owned subsidiary of ChemChina.
"We believe that continued economic growth will drive long-term growth in China's chemical sector. It is a privilege to invest alongside a superb management team in a leading company in one of China's key industrial sectors," said Antony Leung, Blackstone's chairman for Greater China.
ChemChina said Bluestar will become a limited company with investment of foreign capital, allowing ChemChina and Blackstone to work together to develop Bluestar into a global leader in new material and chemical specialties.
Bluestar, China's leading new-materials group, instructed all three of its listed companies on Thursday to suspend trading of shares as the group company was "negotiating with related sides on important issues", stating that trading would not be resumed until these issues were clarified.
Market observers believed the "related sides" are the Blackstone Group, since cooperation between the two sides has been widely talked about in the market since early June.
This is the first purchase of a stake in a Chinese company by Blackstone. The last time Blackstone made big news in China was in May when China's state foreign-exchange investment company bought $3 billion worth of shares in the group.
Bluestar is a leader in China's sanitation-engineering, water-treatment and new-materials industries, with both sales revenue and assets expected to reach 30 billion yuan ($3.95 billion) in 2007. Currently, it controls 25 factories and four research-and-development institutions at home and 15 factories and seven R&D and technological-service institutions overseas.
Compared with other big state-controlled Chinese companies, Bluestar is quite young. Its founder, Ren Jianxin, started it in 1984 with 10,000 yuan and seven and a half people, mainly producing a kind of anti-erosion detergent. In 10 years, it became the world's top sanitation-engineering company in terms of scale, technologies and equipment.
In the field of sanitation engineering, Bluestar has made notable achievements, from equipment for chemical plants and crude transmission pipes to retired nuclear facilities, with quite a number of world records made over the past few years.
Bluestar has become the country's most important player in water treatment, using advanced membrane technologies. It has built more than 1,000 membrane water-treatment projects throughout the country. It also built the "Bird Nest", the main stadium for the 2008 Beijing Summer Olympic Games.
A landmark move in the company's history was made in May 1997, when Bluestar entered the new-materials field by acquiring Jiangxi Xinghuo Organic Silicon Factory. Now it is China's top and the world's third-largest organic-silicon producer, with an annual output of 420,000 tonnes.
In addition, it is the country's top producer of epoxies, PBT (polybutylene terephthalate) synthetic resins and some other new materials. It has intellectual-property rights in a number of new-material fields.
Over the past few years, Bluestar began to seek overseas acquisitions. On January 17, 2006, it purchased outright the world's second-largest methionine producer, France's Adisseo, in the largest acquisition so far by a Chinese company in France.
Last October 26, Bluestar acquired a stake in the silicones business of Rhodia Group to become the world's third-largest organic-silicon producer. It also bought Australia's largest ethylene producer and only polythene producer Qenos in April 2006.
"Overseas purchases have helped Bluestar to set up an international operating platform, on which Bluestar can develop with domestic advantages in low-cost raw materials and market potential, and overseas advantages in technologies," said Ren, now president of ChemChina Group.
Having obtained state-of-the-art patent technologies via these acquisitions and combined them with the domestic advantage of low-cost materials, Bluestar plans to build a domestic methionine factory to become the top producer in the world.
It also plans to build a silicon factory with an annual output capacity of 400,000 tonnes, which will bring Bluestar's total capacity of organic silicon to a million tonnes, jumping to second in the world.
Bluestar is renowned as the most successful Chinese company in acquiring and operating European companies, especially after some of its peers bought into Europe and encountered operating difficulties there.
Ren attributed its overseas success to its unique corporate culture, which highlights the quality of managers, a common view of value, and communication among different national cultures.
Every time Bluestar acquired a foreign company, Ren would write letters to foreign senior managers and staff to introduce the history, development prospects, corporate value and other information about Bluestar, and announce the company's employment plans in a timely way, so as to increase the understanding and identity of the new staff.
"The key to fusing corporate cultures is to study and respect local cultures of the purchased companies," Ren said. "Every nation has its own unique culture, different cultures should complement each other to reach win-win results."
Xi Yuxin, spokesperson for Bluestar, said, "It's a good choice to cooperate with overseas strategic investors when you want to improve management levels and develop overseas markets."