In the current volatile market that has seen few private equity deals, Blackstone Group Lp. is investing $50-80 million (about Rs239-383 crore) in Hyderabad-based Nuziveedu Seeds Ltd.
The promoter group of Nuziveedu will dilute less than 25% stake in the company’s equity, managing director M. Prabhakar Rao told Mint.
This will be Blackstone’s third investment in India since January, and eighth in the country since it started an office here three years ago.
Fund infusions have slowed in India as a fallout of the global financial crisis. Venture Intelligence, a Chennai-based research outfit that tracks private equity and venture capital deals, said there were just 48 deals worth $984 million in the fourth quarter of calendar 2008 till 10 December, compared with 141 deals worth $4.8 billion in the three months to December in 2007.
“Typically,?the?fourth?quarter is the most active when it comes to deal-making. But this year, that clearly doesn’t seem to be so,” said chief executive Arun Natarajan.
Blackstone, however, seems to be in no hurry to slow. On 26 November, the day terrorists struck in Mumbai, the US-based private equity firm closed a $50 million deal with CMS Group, carving out a new company from CMS Computers Ltd to focus on the domestic information technology business. It took a 52.5% stake in the company, according to people familiar with the deal.
Its other investment this year was in Mumbai-based Allcargo Global Logistics Ltd, in which it picked 10.38% stake for Rs242 crore in February.
Akhil Gupta, chairman and managing director of Blackstone Advisors India Pvt. Ltd, did not immediately respond to an email sent to him Monday evening on the group’s investment in Nuziveedu. He did not answer calls made to his mobile phone.
The seed maker will use the money to develop and market seeds of rice, corn and vegetable hybrids, “for which we see a huge potential in India,” Rao said over phone from Hyderabad. Nuziveedu, which Rao said currently earns at least 80% of its Rs500 crore revenue by selling hybrid cotton seeds, is a privately held company.
Gupta said in a recent interview that his firm now preferred privately held companies over listed ones, but had said he was not overly concerned about share movements as the prices could be “completely diverse from the fundamentals”.
Shares of the three listed companies Blackstone has invested in—Allcargo, Nagarjuna Construction Co. Ltd and Gokaldas Exports Ltd—are trading below cost price.
Farming-focused companies seem to have caught the fancy of private equity investors. Last week, Morgan Stanley Private Equity Asia announced its first deal in India by picking up a minority stake in Mumbai-based castor oil maker Biotor Industries Ltd for Rs182 crore.