China to Buy $3B Stake in Blackstone

The Chinese government will buy a 9.9% stake in Blackstone, the US private equity fund that's about to launch its IPO. The $3 billion purchase of nonvoting shares, the first time China has invested its enormous foreign reserves in commercial stock, is meant to exploit a private equity market booming almost as much as China itself.

CEO Stephen Schwarzmann called the sale, at a slight discount from the IPO price, "a historic event that changes the paradigm in global capital flows." The deal is likely to meet political opposition in the US and comes with strings: China must hold its stake for four years and may not invest in other private equity groups until May 2008. (More China stories.)