HONG KONG/SINGAPORE, Oct 3 (Reuters) - Blackstone Inc ( BX )

, the world's largest alternative asset manager, has

started raising its third Asia-focused private equity (PE) fund,

targeting at least $10 billion, two people with knowledge of the

situation said.

The new buyout fund, Blackstone's third in Asia, will

primarily focus on India with the largest percentage of capital

allocated there, the sources said, declining to be named as they

were not authorised to speak to the media.

China will not be a focus market for the new fund, the

sources said.

Japan and Australia will be two other significant markets

for Blackstone while it continues to look at other countries

such as South Korea and Singapore, they said.

The capital allocations of Blackstone's new Asia PE fund

would not be set in stone, however, and strategy could shift

based on the macroeconomic environment, one of the sources said.

Blackstone declined to comment.

The fundraising comes as global and regional investors seek

new growth in Asia as investing in China has become challenging

in recent years due to an economic slowdown, a regulatory

crackdown and Sino-U.S. tensions.

Private equity-backed deals in mainland China totalled $27

billion in the first three quarters, down 9.5% year-on-year to

be overtaken by Australia as the biggest market in Asia, LSEG

data showed.

China-focused private equity fundraising also dropped to the

lowest in at least 10 years, totalling $11 billion as of Sept.

26, according to industry data provider Preqin.

Investor sentiment on China has, however, turned recently

with inflows leading to a rebound in Chinese stocks after the

government announced a broad stimulus package including interest

rate cuts and a $114 billion war chest to boost markets.

Blackstone said last year it was bullish on India due to its

faster growth than other large countries.

It also planned to double headcount in Singapore in an

expansion into Southesat Asia, its Asia PE head told Reuters in

January.

New York-based Blackstone, which manages over $1 trillion in

assets including real estate, closed its second Asia buyout fund

at $11 billion in 2022.

It announced a deal in September to buy Australian data

centre group AirTrunk for an implied enterprise value of over

A$24 billion ($16.10 billion), in what would be Blackstone's

largest investment in the Asia Pacific region.