Blackstone may boost its investment in India

Blackstone Group The world’s largest private equity firm Blackstone, which is planning to raise $4 billion 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 above a staggering $2.5 billion, while it has also announced to create a $5 billion fund with Citigroup Inc for investing in various Indian infrastructure projects.

According to the merchant banking sources, the group has recognised 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 over $78 billion of assets, is focussing on sectors like IT, media, technology and banking for its future India investment plans, sources said.

The India story has been on the radar for Blackstone for quite some time, as its two NYSE-listed funds — Asia Tigers Fund and The India Fund have put in close to $2 billion dollars in the shares of Indian companies.

Besides, the company has closed two private equity 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 private equity portfolio has returned over 30 per cent annually since inception in 1987.

The India Fund, the largest US listed fund with exclusive focus on the country, is managed by the Blackstone Asia Advisors and is estimated to have invested over 98 per cent money in Indian stocks, totalling $1.88 billion.

Blue chips like Infosys, Reliance Industries, Bharat Heavy Electricals, 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 per cent of a total $1.04 billion as on March 1.

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 pie in Indian realty sector, Blackstone set up a real estate operations office in Mumbai earlier this year to scout for opportunities in this booming space.

It bought a five per cent stake in Chennai-based realty firm SSI for Rs 14 crore in January and a significant stake in newly listed C&C Constructions for Rs 18 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 per cent stake for Rs 675 crore.

Blackstone Group earns higher returns from investing in real estate than from its takeover funds and was managing $17.7 billion worth real estate funds as on March 1.

However, acquisitions are one area where India has not spelt good news for 1985-founded Blackstone so far, as a string of attempts have not bore fruit - the latest being its joint bid with other PE firms for mobile operator Hutch-Essar.

Blackstone is also understood to have been in the race for MTR Foods, which was bought by Norway’s Orkla for Rs 350 crore. Way back in 2005, a possible stake buy in the $2.9 billion dollar Dabhol Power Project also did not return with desired results.

Source: Hindu.com

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