Warburg in $490m China gas partnership

The firm has tied up with Shanghai Baosteel Gases to develop industrial gas projects in China

Warburg Pincus has formed a strategic partnership with Shanghai Baosteel Gases to explore and develop industrial gas projects in China, according to a statement.

The firms have also agreed acquire all the industrial gas assets of Henan Jinkai Chemical Investment Holding Group for RMB 3 billion ($488 million; €367 million).

Baosteel Gases is a wholly-owned subsidiary of Baosteel Metal and is a part of the Baosteel Group, a large steel conglomerate in China. Baosteel Gases cover industrial gases, synthetic gases, packaged gases and new energy, operating over 10 subsidiaries across Northwest, East and South China.

Since 1994, Warburg Pincus has invested more than $4 billion into China-based companies in industrial, energy, consumer and retail, healthcare, real estate and TMT industries, and has invested more than $14.7 billion in over 110 energy and industrial companies globally.

“As China’s most competitive steel conglomerate, Baosteel Group has achieved impressive development in growing its diversified business platforms including Baosteel Metal. Warburg Pincus is committed to the long-term prospects and potential of the industrial gas in China,” David Li, managing director at Warburg, said in a statement.

Bo Bai, executive director of Warburg and responsible for investment in energy and industrials in Asia, added, “We like the industry leadership position and quality of assets of Baosteel Gases, as well as the excellent management team in our strategic partnership. We look forward to providing our support for Baosteel Gases’ future development by leveraging our international experience in the capital markets and our strong industry and investment knowledge in China.”

Increasingly, global private equity firms are looking to Asia Pacific to invest in oil and gas assets, using strategic partnerships to form joint ventures with local partners.

In July, The Blackstone Group made its first foray into Southeast Asia’s oil and gas sector, forming an $800 million partnership with Kuala Lumpur-based Tamarind Energy to focus on oil and gas development in the region, Private Equity International reported earlier.

Blackstone will own almost 100 percent of the company, investing from two of its global funds, the $16.7 billion Blackstone Capital Partners VI and Blackstone Energy Partners I, which will each invest an equal amount of capital into the business.