Blackstone nears deal for GI Partners minority stake, sources say

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A Blackstone Group unit that buys stakes in alternative-asset managers is nearing a deal to make a minority investment in GI Partners, according to people familiar with the matter.

The size of the stake that Blackstone Strategic Capital Holdings is in talks to acquire couldn’t immediately be learned. The transaction hasn’t been finalized and either side may decide against a deal, said the people, who asked not to be identified because the information is private.

A Blackstone representative declined to comment, while a representative for GI, a San Francisco-based private-equity and real estate firm, didn’t respond to requests for comment.

GI owned Napa Valley's Duckhorn Wine Company from 2007-2016, when the firm sold Duckhorn to TSG Consumer Partners and purchased Far Niente Wine Estates, also in Napa Valley.

Blackstone, Neuberger Berman Group-backed Dyal Capital Partners and Goldman Sachs’s Petershill unit have raised multibillion-dollar funds to acquire minority stakes in alternative-asset managers. Blackstone has plans to raise a second such fund.

The business of stake sales is burgeoning, in part because it provides a solution for aging founders seeking to pare back their ownership. A portion of the cash raised is often injected into future funds or plowed into new strategies.

Petershill in October landed deals to take minority stakes in private equity firm Harvest Partners and Westbrook Partners, which makes real estate investments. Blackstone agreed to buy a minority stake in New Mountain Capital, a transaction that hasn’t been widely announced but has been communicated to investors, according to a statement from San Diego County Employees’ Retirement Association’s CIO Stephen Sexauer at an October meeting.

GI was founded in 2001 by former CB Richard Ellis managing director and Nomura Securities banker Rick Magnuson, who is now executive managing director. The company’s private equity group invests as much as $500 million in companies in industries including health care, software and services, according to its website. In real estate, GI’s target deal size stretches to $1 billion and its areas of focus include logistics-based warehouse and distribution facilities as well as real estate such as nursing homes that are poised to benefit from an aging population.

GI plans to launch a digital infrastructure fund targeting assets such as data centers, Bloomberg reported in October.

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