By Joe Bel Bruno
Associated Press
Tuesday, May 22, 2007

NEW YORK, May 21-- Blackstone Group, the second-largest U.S. private equity firm, said Monday that it planned to raise $3.87 billion to $4.13 billion in an initial public offering this year.

In a filing with the Securities and Exchange Commission, Blackstone said it would value its common units between $29 and $31 each.

On Sunday, China said it would separately invest $3 billion in Blackstone.

Underwriters, which include Morgan Stanley, Citigroup, Merrill Lynch, Lehman Brothers Holdings and Deutsche Bank, have the option to float an additional 20 million units. That could increase the amount of money raised to $4.75 billion.

Blackstone is not floating its portfolio of companies, but instead its management group, which is owned by the company's senior managing directors. Holders of the company's common units will have limited voting rights and no right to elect the general partner or its directors, according to the prospectus.

Blackstone plans to list its shares on the New York Stock Exchange under the symbol "BX."

With the investment by China, Blackstone could raise as much as $7.75 billion once its management side becomes publicly traded. It is the first time that China has made a direct investment in a U.S. private-equity fund. A Chinese official said Monday that the country had no immediate plans for more investments like its deal with Blackstone. "We haven't been looking for other deals yet, because as you know, we haven't established this company yet," said Jesse Wang, chairman of government-owned Jianyin Investment, which signed the deal with Blackstone.

The Blackstone agreement marks China's long-anticipated attempt to diversify how it invests its almost $1 trillion in foreign exchange reserves.

Blackstone, which has racked up $400 billion in deals and announced its public offering in March, operates a $15.6 billion fund, and its holdings include Madame Tussauds wax museums and real estate company Equity Office Properties Trust. The IPO will help it tap new sources of capital for multibillion-dollar acquisitions.

The deal with China will allow Blackstone to directly buy into Chinese companies as that nation becomes more receptive to foreign investments.