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Blackstone in largest Asia fund exit to date

The New York-headquartered asset manager has sold a majority stake in a Chinese retail operator acquired via its $5bn Blackstone Real Estate Partners (BREP) Asia fund to a consortium led by China Vanke.

Blackstone has sold a majority stake in the SCP Company, a Chinese shopping mall owner, developer and operator, to a consortium led by the Shenzhen-based property developer China Vanke. The total enterprise value of SCP following the transaction is understood to be approximately $4 billion.

A source familiar with the deal has confirmed to PERE that it was officially completed last week. China Vanke, in partnership with other undisclosed investors, has invested a total of 12.9 billion yuan ($1.93 billion; €1.73 billion) to acquire a 96.55 percent stake in SCP. The source said Blackstone will retain a modest stake in the platform and leverage it for investing in other retail opportunities in the country.

The sale of SCP, pegged to be one of the largest retail property deals in the region, is also the largest exit by value to date from Blackstone’s Asia-focused private equity real estate fund. Blackstone Real Estate Partners (BREP) Asia, closed on its hard cap of $5 billion in end 2014 in what was a record closing for a fund of its kind in the region.

Currently over 50 percent of the fund’s capital is understood to have been deployed.

China Vanke had first alluded to the deal in a July filing with the Hong Kong Stock Exchange when it spoke of plans of acquiring an unspecified commercial property portfolio from Blackstone. The developer said negotiations for the portfolio acquisition started in January this year. China Vanke is understood to have invested approximately 3.9 billion yuan via a wholly-owned subsidiary for the acquisition and the remainder was raised from other investors.

SCP owns shopping malls across Tier 1 and 2 cities, with a major concentration in the southern part of China. It currently has 29 malls under management, up from 17 in 2013 when Blackstone made its first investment in the platform. The group’s flagship property is a mall and office complex in Shenzhen that also houses Walmart’s China headquarters.

In November 2013, Blackstone acquired a 40 percent stake in SCP. According to news reports at the time, the New York-based private equity real estate giant had invested $400 million for this stake.

Blackstone and China Vanke also operate a logistics joint venture partnership that was set up in 2015.