Blackstone bids to privatize HK$2.5bn developer

The real estate giant has offered to take a Hong Kong-listed property company private in one of the first deals from its Asia fund.

The Blackstone Group has tendered a HK$2.5 billion (€242 million; $322 million) offer to take private Hong Kong-listed Tysan Holdings, a small-cap real estate company with properties in Mainland China and Hong Kong, according to a Hong Kong stock exchange disclosure.

The deal would involve no leverage, and the equity would be split between two of Blackstone’s funds. The Blackstone Real Estate Partners Asia (BREP Asia) fund would provide 80 percent, while Blackstone Real Estate Partners VII would provide the remaining 20 percent. This is the fourth deal for BREP Asia, which held a first close on $1.5 billion in June.

Blackstone’s offer represents a price of HK$2.86 a share, a 10 percent premium to the closing price of HK$2.6 per share on the last trading day, according to the statement. 

PERE understands that the majority stakeholders in Tysan have already agreed to the offer irrevocably, giving Blackstone an approximately 60 percent stake. The remaining minority shareholders will have to decide to accept or reject Blackstone’s offer by the 31 March 2014 deadline, according to the statement. Even if the offer is rejected, however, it is understood that Blackstone would retain its majority stake and continue to run Tysan as a public company.

It is understood that Blackstone has been building a relationship with Tysan over the past year, and the take-private offer was triggered by the chairman indicating that he wanted to sell his stake. Shareholders may have anticipated a sale, as Tysan’s stock price has gained almost 80 percent over the past year.

Once the transaction is complete, Blackstone will control Tysan’s one office building in Hong Kong and six residential projects in Mainland China through its ownership of the company. It is understood that Blackstone is planning to run Tysan’s business with few changes, and continue its strategy of strata selling the residential projects in China. Residential projects in China are typically self-liquidating thus providing Blackstone with an exit strategy.

Blackstone declined to comment further than the statement.