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China to Get Big Stake in Blackstone

Beijing will invest $3 billion and receive nonvoting common shares.
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China is getting a $3 billion piece of

Blackstone

, the private equity titan that's preparing to go public.

On Sunday, the Chinese government and Blackstone jointly announced that a Chinese state-run investment company will invest that amount in nonvoting common stock that it will hold for at least four years.

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Beijing is getting a discount. Each Blackstone common share it receives will cost 95.5% of the public offering price.

If necessary, Beijing will reduce the number of shares it acquires so that its stake in Blackstone doesn't surpass 10% of outstanding equity.

The investment company doesn't yet exist but will be established soon, according to a joint press release. The investment will close concurrently with the $4 billion IPO.

"We are pleased to welcome the State Investment Company as an equity owner of our firm," said Stephen A. Schwarzman, chairman, chief executive officer and co-founder of Blackstone. "We are proud to be part of such a significant transaction for both of our organizations."

Blackstone and other private-equity firms have been on a buyout binge that has helped boost the stock market.