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Blackstone India warrant deal blocked by regulator

Blackstone India warrant deal blocked by regulator
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First Published: Mon, Jul 13 2009. 11 23 PM IST

Failed plan: Blackstone India senior managing director Akhil Gupta. Ashesh Shah / Mint
Failed plan: Blackstone India senior managing director Akhil Gupta. Ashesh Shah / Mint
Updated: Mon, Jul 13 2009. 11 23 PM IST
Mumbai: Private equity firm Blackstone Group Lp. will not raise its stake in Nagarjuna Construction Co. Ltd through warrants after the plan failed to get regulatory approval. This is the second time Blackstone has hit a regulatory hurdle in India.
Blackstone, which in late 2007 announced a $150 million (around Rs741 crore) deal to buy shares and warrants in Nagarjuna Construction, had to drop the purchase of 9.1 million warrants after it did not get approval from the Foreign Investment Promotion Board, the Indian firm said in a statement.
Failed plan: Blackstone India senior managing director Akhil Gupta. Ashesh Shah / Mint
Blackstone, which has invested at least $730 million in India since its arrival in 2005, declined to comment.
The firm has invested in seven Indian firms, its website showed. It owns 9.3% of Nagarjuna, according to stock exchange data.
Nagarjuna Construction officials could not be reached immediately.
Last year, Blackstone’s planned $275 million investment in unlisted Ushodaya Enterprises failed to get finance ministry approval.
Analysts said the regulatory block was a one-off and did not point to a trend for private equity investment in India.
“It is very rare that something like this happened. It does not in anyway denote that regulatory approvals could trouble the PE industry,” said Arun Natarajan, chief executive of deal tracking firm Venture Intelligence.
Blackstone bought the Nagarjuna Construction stake at Rs202.50 near the peak of an extended bull run in Indian stocks.
The warrants were to be executed at Rs225 or almost 90% higher than the current stock price.
Shares in Nagarjuna Construction, which plans to raise up to Rs550 crore by selling shares to institutions, fell 3.5% on Monday to Rs119.95 in a weak Mumbai market.
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First Published: Mon, Jul 13 2009. 11 23 PM IST