Mumbai: Sharply stepping up its India investments in recent weeks, Blackstone Group invested $150 million (Rs616.5 crore), in Hyderabad-based public infrastructure firm Nagarjuna Construction Co. Ltd, gaining a 12.2% stake through new shares and warrants.
Post-deal, the holding of promoters in Nagarjuna will go down from 24.4% to 22.2%.
Y.D. Murthy, senior vice-president at Nagarjuna, said the new funds will be usedfor investments in public-private infrastructure projects, and also to bid for larger projects.
He said 65% of the funds would be put into special purpose vehicles (SPVs) floated for executing projects in segments of roads, power and seaports and the balance 35% would go towards working capital.
Blackstone had previously made a commitment to invest in India’s infra-structure.
In February, it partnered with Infrastructure Development Finance Co. (IDFC), Citigroup and Indian Infrastructure Finance Co. (IIFC) to launch a $5 billion fund for such long-term investments.
“We are very bullish on this sector,”said Akhil Gupta, managing director of Mumbai-based private equity firm Blackstone Advisors India Pvt. Ltd, explaining that India’s spending on infrastructure should increase significantly given that it has been only one-fifth of China’s spending.
Gupta also noted that finance minister P. Chidambaram had increased the target spending for infrastructure in the 11th Five-Year Plan, of which more than 50% will be spent on construction of roads and highways.
This is Blackstone’s second deal in August. Earlier, in June, the firm had invested $200 million in back-office services company Intelenet Global Services Pvt. Ltd, taking an 80% stake. On 20 August, it followed up with a deal to buy up to 70.1% of garment exporter Gokaldas Exports Ltd for about Rs675 crore.
The company had also invested in a Hyderabad-based media firm as well as a pharmaceutical company. It had previously co-invested in retail company Provogue (India) Ltd.
Nagarjuna said its board approved the issuing of 2.02 crore equity shares at Rs202.50 each and, 9,111,000 warrants of Rs225 each to Blackstone.
The securities would be issued to Blackstone GPV Capital Partners Mauritius V-A Ltd, Blackstone GPV Capital Partners (Mauritius) V-H Ltd and Blackstone FP Capital Partners (Mauritius) V FII Ltd, three subsidiaries of Blackstone, one of the largest private equity firms globally.
Each warrant is convertible into one equity share of Rs2 each at a premium of Rs223, said Nagarjuna.
Nagarjuna’s shares rose Rs2.80, or 1.44%, on Tuesday to close at Rs197.55 a share.
The final approval of Nagarjuna shareholders would be sought at an extraordinary general meeting scheduled to be held on 24 September.
(PTI also contributed to this story.)