most, the news that an investment company
owned by the Chinese government was buying
10% of a major US private equity company
is just another piece of financial news.
We wonder if it might be a backdoor strategy
to eventually acquire US companies.
is one of the largest and most successful
private equity companies, with billions
in assets, and complete or partial ownership
of companies including Cadbury Schweppes,
Michael Stores, TRW Automotive, and many
others. Private equity groups in general
have been a huge force in the US
stock market and company strategy in recent
years. Private equity investors buy established
companies (as opposed to venture capitalists,
which invest in newer companies), fix them
up by reducing costs and other improvements,
and then eventually take them public or
sell them off.
historically a private company, has announced
plans to itself become a public company.
It has just announced a deal in which the
Chinese investment company will buy a 10%
share in the corporation before it releases
question: Is this just an investment decision
by the Chinese government, looking for better
returns, or could this possibly be a strategy
to enable China
to more easily acquire control of US corporations?
As the goal
of private equity is to cash in on its investments
by either selling or spinning off the companies
it has purchased, wouldn’t it make
sense that an investment partner would get
a good shot at taking its portfolio companies
off Blackstone’s hands at a nice profit?
would have an easy path to realizing value
by selling to a partner/investor, and China
would have perhaps as a result have less
obstacles to picking up strategic US assets.
not seen this question raised elsewhere,
with the focus being only on the financial
aspects of the deal, but we think it’s