BX Blackstone Inc

HONG KONG—Private-equity firm Blackstone Group LP has agreed to sell one of its largest assets in China to a unit of Chinese shipping-and-airline giant HNA Group for about $675 million in cash, according to people familiar with the situation.

New York-based Blackstone will sell information-technology outsourcing firm Pactera Technology International Ltd. to HNA EcoTech, the Chinese conglomerate's technology unit, which was formed in March, one of the people said. The sale, which was agreed upon in August but hasn't closed yet, currently values Pactera at about $930 million, including debt.

The sale hands Blackstone a return of more than 1½ times its initial investment, according to people familiar with the situation. Blackstone led a consortium that invested more than $600 million to buy Nasdaq-listed Pactera in March 2014.

Beijing-based Pactera and its subsidiaries provide IT outsourcing and consulting services to multinational and Chinese corporations. The company reported revenue of $777 million in 2015. The company has tried to build up its roster of domestic Chinese clients, as spending by local companies on IT has grown.

Pactera's operations have weakened since early last year, according to an August report by Moody's Investors Service, in which it noted the Blackstone sale and downgraded Pactera's debt ratings to B2 from B1, both of which are considered "speculative," or junk. Moody's had downgraded Pactera to B1 from Ba3 in December last year.

In its December report, Moody's said Pactera's operating margin fell below 3% in the first nine months of 2015 compared with 8.7% in the same period of 2014, driven by higher wages in China and weaker economic performance in Europe where some of its clients operate. Margins have continued to stay below 3%, Moody's said in August.

Blackstone hired Morgan Stanley to sell Pactera at the beginning of this year after receiving unsolicited expressions of interest from buyers, people familiar with the situation said at the time.

On Jan. 13, Pactera sealed a deal to buy Blue Fountain Media, a New York digital branding agency, for an undisclosed amount.

Write to Kane Wu at Kane.Wu@wsj.com

Corrections & Amplifications: The sale was agreed upon in August but hasn't closed yet. An earlier version of this article incorrectly stated final terms were being negotiated. (Oct. 5, 2016)

(END) Dow Jones Newswires

October 05, 2016 04:35 ET (08:35 GMT)

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