Blackstone’s hedge fund arm, Strategic Capital Holdings Fund, has acquired a passive minority stake in PAG, a Hong Kong-headquartered Asia-focused alternative investment firm, PERE’s sister publication, Private Debt Investor, reported Tuesday.
PDI understands that it is the first offshore transaction that Strategic Capital Holdings Fund has completed.
Strategic Capital Holdings announced on March 23 that it had acquired a minority stake in New York-based Kohlberg & Company. The same vehicle also took a minority stake in Rockpoint Group, a Boston-based global real estate investment management firm, PERE previously reported.
“We’ll look at anything across the spectrum in alternatives. We’re looking for best-in-class managers in their space and for situations where we can be strategic value-adding partners to their business,” Scott Soussa, head of Blackstone Alternative Asset Management’s strategic capital group, told PERE earlier this month. “That can include helping with marketing and distribution or helping to optimize the partnership structure. It could also be a way of monetizing the next generation of partners to get equity into their hands.”
PAG’s real estate strategies encompass equity and debt investments, and, like Blackstone, the firm runs opportunistic and core-plus real estate funds. Its sixth Asia-focused opportunistic fund closed at $1.9 billion in September 2017.
Details on the terms of Blackstone’s deal were not made public. PDI understands that all the final elements came together in the past week, culminating in yesterday’s announcement.
A spokesperson from PAG confirmed the Blackstone fund’s announcement but declined to comment further on details of PAG’s ownership structure.
“We welcome this investment in our business by Blackstone’s Strategic Capital Holdings Fund, and we appreciate its endorsement of PAG as a best-in-class asset manager,” said Weijian Shan, chairman and CEO of PAG, in a statement.
A spokesperson from Blackstone declined to comment further on the transaction.
As the stake acquisition is a passive investment, there will be no effect on PAG’s management decision-making process, a source familiar with the matter told PDI today.
The fund vehicle is part of Blackstone Alternative Asset Management (BAAM), which was set up specifically to acquire minority stakes in smaller private equity firms, according to a statement.
BAAM is the world’s largest discretionary allocator to hedge funds, Blackstone’s latest annual report disclosed on March 1. It managed $75.1 billion of total assets under management as of December 31, 2017, including its individual investor solutions platform, which managed more than $8 billion as of March 1.
Blackstone said its hedge fund segment’s activities include purchasing minority ownership interests in other hedge funds, investing in special situations opportunities, and providing alternative solutions in regulated structures.
The hedge fund vehicle, Strategic Capital Group, is worth as much as $3.3 billion as per Wall Street Journal reporting.
PAG managed over $20 billion in capital across private equity, private debt and real estate strategies as of December 31.
Blackstone manages $434.1 billion in assets under management and invests across private equity, real estate, public debt and equity, non-investment grade credit, real assets and secondary funds, globally.
With additional reporting by Meghan Morris.