Mumbai: Since Blackstone Advisors Pvt. Ltd’s debut in India back in May 2005, which it flagged off with a hefty $1 billion (Rs4,300 crore then) allocation—the largest by a single private equity investor at the time, the firm has not made significant inroads in the Indian private equity market.
It has made just two investments so far: $50 million (Rs205 crore) in Pune-based Emcure Pharmaceuticals Ltd and $275 million in Ushodaya Enterprises Ltd, the Hyderabad-based media group which owns Telugu newspaper Eenadu. The two deals are a far cry from the $300-400 million-plus deals that the firm had stated as its investment mandate for India two years ago.
China and India constitute critical markets for Blackstone’s private equity bets outside the US and Europe, an exercise it kicked off in 2000.
This was followed by the Mumbai office in May 2005 and, this May, China joined the list with the Chinese government picking up a 10% stake in Blackstone for $3 billion. The investment implies that Blacktone will be able to get an arm and leg into buyout deals in China with the tacit approval of the government, something that other US private equity firms have struggled with for sometime.
Like many of its peers, emerging markets such as China and India are fundamental to Blackstone’s private equity activities as returns in traditional markets such as the US and Europe become more difficult to achieve. Private equity assets account for the largest chunk of the $78.7 billion alternative investments and overall assets of the advisory firm—$31.1 billion as on 1 March, according to Blackstone’s initial public offering prospectus. Though China seems to have taken the lead for now, Blackstone India’s chairman and managing director Akhil Gupta and team have, in the past few months, made some interesting moves.
This February, Blackstone teamed up with Infrastructure Development Finance Corp. and Citigroup to commit $250 million to kick-start a proposed $5 billion infrastructure fund promoted by the finance ministry-backed India Infrastructure Finance Co. People at the firm, who did not want to be identified, say that since May 2005, it has also re-aligned its investment game plan for India.
Against its earlier mandate to focus on buyout deals here (it had publicly stated that it would seek controlling stakes in investee companies), the firm has now fallen in sync with the norms that rule India’s private equity market: significant minority stakes.
People close to the firm also say that Blackstone’s New York bosses are planning to get directly involved in deal-making here even as there is talk in the private equity ranks about a reshuffle in the Mumbai office. While people at the firm here dismiss such talk, Gupta was not available for comment because of a “quiet period” ahead of the proposed initial public offering.