Blackstone Walks Away From $4 Billion New World Deal

Blackstone Inc. (BX) has stepped away from a proposed $4 billion tie-up with New World Development (NDVLY), after the Hong Kong property developer resisted a structure that would have handed the US investment firm control. The decision ends a yearlong negotiation that had already slowed in recent months, with people familiar with the matter saying Goldman Sachs Group Inc. (GS) advised Blackstone on the deal. Under the earlier plan, Blackstone would have injected about $2.5 billion into a special-purpose vehicle, while the Cheng family would have contributed $1 billion to $1.5 billion, potentially making Blackstone the largest shareholder. The collapse of that proposal keeps pressure on New World as investors watch whether the embattled developer can secure fresh capital without forcing the Cheng family to give up its position as the company's largest shareholder.New World's talks have shifted toward other possible backers, including a consortium led by RRJ Capital and Ares Management , whose proposals appear less focused on control. RRJ is still assembling a consortium and has proposed acquiring less than 30% of New World through a share sale, while Ares has offered a capital injection to support the company's balance sheet but has asked the Cheng family to pledge shares as collateral. Ares has also invited some Asian sovereign funds to join the consortium, while CapitaLand Investment previously held discussions with the developer, though it remains unclear whether those talks are still active. That leaves New World with several possible paths, but each one appears tied to governance, collateral, and balance-sheet repair at a moment when lenders and potential investors may be looking for more certainty.The near-term investor focus could now turn to New World's HK$70 billion, or $9 billion, in liabilities tied to a long-term rental agreement for a shopping mall at Hong Kong airport, which competing groups want resolved before any deal proceeds. The developer is negotiating with the Hong Kong Airport Authority to terminate the previous agreement and transfer the HK$30 billion mall to the authority at no cost, according to people familiar with the matter. The timing matters because New World faces pressure to produce a plan by the end of June, when its annual audit is released and banks need to reset loan terms based on the latest balance sheet figures. There is still a possibility the Cheng family could avoid an outside deal and inject capital through a rights issue after its finances were strengthened by the recent $4.3 billion sale of Alinta Energy.