According to a US regulatory filing, Chinaâ??s sovereign wealth fund, China Investment Corp, is planning to increase its stake in Blackstone Group from 9.9 per cent to 12.5 per cent.
This time, however, CIC will buy shares in the open market, where Blackstone is trading at a fraction of the price CIC paid in the spring of 2007 just prior to the US private equity groupâ??s listing.
By buying shares at greatly reduced prices, CIC is cutting the average cost of its investment. While its original agreement with Blackstone binds the Chinese to hold shares for four years, any new purchases have no such restrictions. At midday on Thursday, Blackstone shares were trading at $8.83. CIC originally paid over $29 a share, a slight discount to the IPO price.
Morgan Stanley analysts estimate the agreement would allow CIC to buy 25 per cent of the current float. With any new share purchases, CIC would also acquire the same voting rights as other holders.
