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Blackstone opens Chinese entity in Shanghai

The US private equity giant has officially launched its first RMB fund and signed an agreement with the state-backed Shanghai Lujiazui Financial Development Company.

The Blackstone Group has opened Blackstone (China) Equity Investment Management Company, a Chinese subsidiary managing its first regional RMB fund; Blackstone (China) Equity Investment Fund.

Blackstone (China) Equity Investment Management Company was set up under a pilot policy introduced in June, which allows foreign private equity and venture capital firms in Shanghai’s Pudong New Area to established wholly-owned Chinese entities.

In August, Blackstone signed a joint venture agreement with the Pudong government to raise up to RMB5 billion ($732 million; €497 million) for its first RMB fund. Fundraising for this fund is ongoing, Antony Leung, Blackstone’s chairman in China, told Dow Jones at the firm’s signing ceremony in Shanghai.

Other foreign private equity firms including First Eastern Investment Group, CLSA Asia-Pacific Markets, The Carlyle Group, Prax Capital and Abax Global Capital have said they will take advantage of the policy, and are expected to raise a total of at least RMB23 billion.

Blackstone’s China subsidiary has also signed an agreement with Shanghai Lujiazui Financial Development Company, a state-backed financial company. It is unclear if Shanghai Lujiazui will be investing in the fund.