Blackstone Group has agreed to spend no less than 260 million yuan ($37 million) to acquire a majority stake in a Guangdong-based logistics management company from a wholly-owned affiliate of Chinese conglomerate Dongbai Group.
The New York-based private equity major is acquiring an 80 per cent stake in Chinese logistics management business, Foshan Ruixin Logistics Management, through DC Foshan Holdings II Limited for a tentative price of 269 million yuan ($38 million), said Dongbai Group in a recent filing with the Shanghai Stock Exchange.
DC Foshan Holdings II Limited plans to first transfer 51 per cent of the total deal amount to the seller, and then settle the remaining 49 per cent in accordance with the final price decided by the two parties, according to the filing.
Upon the completion of the deal, Blackstone Group will become the ultimate controller of Ruixin, while Dongbai Group will retain a 20 per cent stake in the company.
Ruixin booked about 6.60 million yuan ($938,112) in operating income and a net loss of 6.26 million yuan ($889,785) in the first nine months of 2019. The company registered 4.03 million yuan ($572,793) in operating income and 1.03 million yuan ($146,396) in net loss in 2018, according to statistics disclosed in a previous filing.
The investment represents the latest cooperation between Blackstone Group and Dongbai Group since the two companies entered into a strategic agreement in 2018 to cut deals in the Chinese real estate market. Blackstone Group has previously bought out at least three logistics companies in the country through its partnership with Baidong Group:
In December 2019, Blackstone Group purchased an 80 per cent stake in a logistics business based in southwestern China’s Chengdu city from Dongbai Group for about 170 million yuan ($24 million).
The American private equity firm also spent 350 million yuan ($50 million) to acquire an 80 per cent stake in another Tianjin-based supply chain management firm in September 2019.
In October 2018, the company paid at least 275 million yuan ($39 million) to purchase 80 per cent shares in a Guangdong-based high-end logistics storage firm, also from Dongbai Group.
Likewise, Dongbai Group maintains a 20 per cent stake in all the three portfolio companies to continue providing them with operation and management services.