New Delhi: In what will be seen as a moral victory that clears its name in a murky political saga that had cast a long shadow on India’s foreign direct investment policy, Blackstone Group Lp. appears to have finally succeeded in getting India’s finance minister P. Chidambaram to formally sign off on a now moot proposal from the private equity (PE) investor to invest around Rs600 crore in Ushodaya Enterprises Ltd, the publisher of Eenadu, the largest selling Telugu newspaper.
According to one person intimately familiar with the saga, the finance minister (FM) formally approved the file, but only under the condition that the Blackstone money would not be used by Ramoji Rao, the promoter of Ushodaya, to pay depositors in Margadarsi Financiers.
Late Wednesday night, Mint could not independently ascertain when the FM, who had previously blocked the deal, signed off. Mint first reported on 7 January the saga of Blackstone’s year-long unsuccessful attempt to get all the necessary clearances for the deal, which in its original form, would have been the single largest PE deal in Indian print media.
However, Blackstone’s proposal became mired in the old political and emerging business rivalry between Rao and Y.S. Rajasekhara Reddy, the Congress chief minister of Andhra Pradesh. Leading the opposition to the deal was Aruna Kumar Vundavalli, a Congress member of Parliament from the state’s Rajamundry constituency who made it a personal campaign to try and stymie the deal.
Even though all the necessary government approvals were obtained for the transaction to go through, the finance ministry blocked the deal. The delay also attracted significant international attention, with the likes of Ratan Tata and William B. Harrison Jr, the co-chairs of the high-profile US-India CEO Forum, raising the issue directly with Chidambaram, who held his ground.
The approval comes 10 days after Mint reported that deal maker Nimesh Kampani had made a personal investment of around Rs1,200 crore in Ushodaya, allowing the company to walk away from the deal with Blackstone. Rao still faces a legal battle in the Supreme Court with the Andhra Pradesh government, which has been trying to seize his assets over the Margadarsi issue.