The Blackstone Group is exploring possible deals in and around China, a move that presents a new direction for the buyout firm and follows similar efforts by its private equity rivals seeking investment opportunities in the region.

Blackstone deal makers have been travelling throughout China to scope out the investment turf, sources familiar with the matter told Reuters, a significant turn for the firm, which had previously hitched its Asian wagon to India.

Last year, Blackstone set aside US$1 billion for India investing and set up an office in Mumbai after deciding after much internal discussion that India was a more attractive near-term play than China.

But China appears to be the firm's new investment frontier, as the country's huge consumer market and industrial sector has pulled Blackstone rivals such as Kohlberg Kravis Roberts & Co. and Bain Capital to the region.

Blackstone, like many global buyout houses, is armed with deep pockets after raising a US$15.6 billion fund in July.

The New York-based firm opened a fund of funds office in Hong Kong this year to provide marketing and support for its US$12.4 billion alternative asset management business, so setting up a buyout group here would not be logistically difficult.

One banker familiar with the situation said Blackstone was interviewing investment bankers to potentially set up a private equity group here.

Blackstone declined to comment for this article.

Whether Blackstone's move into China was prompted by India's shaky markets or simply a push into new, albeit crowded, territory remains unclear.

Since arriving in Mumbai last year, the firm has made one, US$50 million investment in an Indian pharmaceuticals firm, a small sum by Blackstone standards.

1

2

(For more biz stories, please visit Industry Updates)