14 September 2007 16:19 [Source: ICIS news]
SINGAPORE (ICIS news)--US private equity firm Blackstone marked its first buy in China this week bagging a significant stake in chemicals producer China National Chemical Corp (ChemChina), at a time when the country is turning coy to foreign investors.
The New York-based firm made its move after selling 9% of itself to the Chinese government in May for $3bn (€2.2bn).
This, together with the help of its Greater China chairman Antony Leung, a former
Fellow private equity investor Carlyle Group earlier had failed to buy Xugong Machinery following calls from within
Bluestar, with businesses ranging from chemicals, plant equipment, industrial cleaning and car maintenance to the Malan noodle food chain, will be a good ground for Blackstone to start with.
The New York-based company, after recently cashing out for about $5bn on its investment in Celanese in which it put just $650m in equity back in 2004, brings into the
Bluestar, started 23 years ago by chairman Ren Jianxin in Lanzhou with just yuan (CNY) 10,000 ($1,332) and seven staff, has elevated itself as a leading producer in silicones and methonine, a chemical used in animal feed, after two acquisitions.
Its €400m purchase of Rhodia’s silicone business propelled it to the number three global postion in that market while a similar amount was spent on Adisseo which gave it up to a third of the global methionine market.
Integration of the global and China businesses are still in the works and Blackstone’s global management experience and capital injection will come in handy to help boost growth at these acquisitions.
The company owns China Automobile Repair Group, the largest vehicle servicing unit in the country. It will save costs and cash-in on strong growth in automobile manufacturing by producing its own engineering plastics.
Similarly for isocyanates, the company is already producing toluene diisocyanate (TDI) and is building a methylene di-p-phenylene isocyanate (MDI) pilot unit in
With all these downstream projects in
But this was unlikely to take place before 2010 as Sinopec has already bagged approval to build a 1m tonne/year cracker in the same city.
Bluestar needs olefins and aromatics as feedstocks and is building a catalytic pyrolysis process (CPP) unit in northeast
CPP is expected to yield more olefins than the fluid catalytic cracking (FCC) and deep catalytic cracking (DCC) processes, but it could need another few more years to be commercially ready.
Bluestar lags behind majors PetroChina and Sinopec in building new crackers but is learning fast after its acqusition of
It also has to compete with global engineering plastics majors such as Bayer MaterialScience, BASF, GE Plastics (now SABIC Innovative Plastics) who followed their customers to
It has to catch up on building plants with economies of scale, as its current 30,000 tonnes/year TDI output is nowhere near that of BASF, Huntsman, Bayer and local producer Yantai Wanhua Polyurethanes.
But in the long run, Bluestar, armed with proprietary technologies, home ground advantage and strong financial backing from the Blackstone deal, could leave a deeper mark on the petrochemical industry.
Blackstone, or bai shi tong which means all paths are open in Chinese, could also open avenues to the global market for the ambitious chemicals major.
($1 = CNY7.51)
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