New Delhi: The world’s largest private-equity firm, Blackstone, which is planning to raise $4 billion (Rs17,200 crore) from an initial public offer in the US, may further boost its investment in India after closing the public issue.
Blackstone Group’s current investment in India is already more than $2.5 billion, even as it has announced plans to create a $5 billion fund with Citigroup Inc. for investing in various infrastructure projects in the country.
According to merchant banking sources, the group has recognized India as a huge growth market for its future plans and is aiming to beef up its investment portfolio as well as its executive team in the country. The company, which set up an India office in 2005, has just hired Amit Dixit, previously a principal at Warburg Pincus in New York, to join its India team in Mumbai.
The PE giant, managing more than $78 billion of assets, is focussing on sectors such as IT, media, technology and banking for its future India investment plans, sources said.
The India story has been on Blackstone’s radar for quite some time, as its two NYSE-listed funds—Asia Tigers Fund and The India Fund—have put in close to $2 billion in shares of Indian companies.
Besides, the company has closed two PE deals in India over the past six months—a $366 million investment in Emcure Pharmaceuticals in August 2006 and a $275 billion investment in the Eenadu Group, which is India’s single largest media sector investment so far.
Blackstone’s flagship PE portfolio has returned more than 30% annually since inception in 1987.
The India Fund, the largest US-listed fund with exclusive focus on the country, is managed by Blackstone Asia Advisors and is estimated to have invested more than 98% of its corpus in Indian stocks, totalling $1.88 billion. Blue-chips like Infosys, Reliance Industries, Bhel, Bharti Airtel, ICICI Bank, ONGC, Tata Motors, HDFC and ITC are among its top 10 holdings.
Besides, the asset allocation for India in another fund managed by Blackstone—Asia Tigers Fund—was pegged at 8.4% of a total $1.04 billion as on 1 March. Infosys, Bhel and RIL are among the top 25 holdings of this fund, which invests in stocks from Asia’s nine best economies.
Eyeing a larger share of the Indian realty sector pie, Blackstone started operations in Mumbai earlier this year to scout for opportunities in this booming space. It bought a 5% stake in Chennai-based realty firm SSI for Rs14 crore in January and a significant stake in newly listed C&C Constructions for Rs18 crore a year ago.
It is also believed to have been interested in a stake in Mumbai-based Oberoil Constructions, but lost out to Morgan Stanley, which bought a 10% stake for Rs 675 crore.
The Blackstone Group earns higher returns from investing in real estate than from its take over funds and was managing $17.7 billion worth of realty funds as on 1 March.
However, acquisitions are one area where India has not spelt good news for Blackstone so far, as a string of attempts have not bore fruit—the latest being its joint bid with other PE firms for Hutch-Essar.
Blackstone is also understood to have been in the race for MTR Foods, which was bought by Norway’s Orkla for Rs350 crore. Way back in 2005, a possible stake buy in the $2.9 billion Dabhol power project also did not return with desired results.