HONG KONG (Reuters) - U.S. private equity firm Blackstone Group LP BX.N has signed a deal to invest $400 million in Hong Kong-listed YiChang HEC ChangJiang Pharmaceutical Co. 1558.HK via convertible bonds, HEC said Wednesday.

The ticker and trading information for Blackstone Group is displayed at the post where it is traded on the floor of the New York Stock Exchange (NYSE) April 4, 2016. REUTERS/Brendan McDermid

The H share convertible bonds will bear an interest rate of 3 percent per annum if issued, at an initial conversion price of HK$38 per share, HEC Pharma said in a stock filing on Tuesday night.

The drugmaker, based in Yichang in central China’s Hubei province, is planning to use the funds to acquire drugs and other pharmaceutical products, it said.

Blackstone, as a long-term strategic investor, will also improve HEC Pharma’s strategy, operations management and international cooperation, it added.

Shares in HEC Pharma tumbled 7.4 percent to HK$33.60, hitting their lowest since April 18.

Blackstone’s investment comes as Chinese drugmakers are faced with tighter regulatory scrutiny and rebuilding public trust after fresh scandals over faulty vaccines sparked anger on social media in the country last month.

Fitch Ratings said in a report on July 31 such scandals highlighted the risks facing China’s pharmaceutical companies, which focus primarily on the bulk production of a small number of products, making them vulnerable to safety incidents.

Seventeen-year-old HEC Pharma develops, manufactures and sells pharmaceutical products used to treat endocrine and metabolic diseases and cardiovascular diseases, and in the anti-viral field.

HEC Pharma has recently issued a positive profit alert for its interim results for the first half, expecting that it will record an at least 110 percent increase in profit attributable to equity shareholders compared with the same period last year.

Blackstone raised about $9.4 billion in June for two new funds - $7.1 billion in the largest-ever fund dedicated to real estate investments in Asia, and its first private equity fund for the region.