November 22, 2011 / 10:07 AM / in 6 years

Blackstone eyes $500-$720 million deals a year in India

MUMBAI (Reuters) - U.S. private-equity giant Blackstone Group (BX.N) expects to invest roughly $500 million to $720 million a year in India over the next few years, a top official said on Tuesday.

Weak markets are prompting capital-hungry entrepreneurs to knock on the doors of private-equity investors, and valuations are coming down, Akhil Gupta, chairman and managing director of Blackstone India, told the Reuters India Investment Summit.

“Not just ourselves, but the entire fraternity is extremely busy right now,” he said.

The firm expects to do five or six deals a year in India of roughly $100 million to $120 million each, he said.

Gupta declined to comment on media reports that Blackstone was in talks along with rival Carlyle Group CYL.UL to buy the telecoms tower unit of debt-laden cellular carrier Reliance Communications (RLCM.NS).

While Blackstone has been a big investor in infrastructure in India, he said the telecoms sector, crowded with more than a dozen cellular carriers, remains plagued by regulatory uncertainty.

“I can give you lots of scenarios where telecom may be a great buy, but it will depend on how the regulations unfold, and I have no certainty that regulations unfold the way it should unfold,” Gupta said.

Private-equity investments in India jumped 31 percent to $7.89 billion in the first three quarters of 2011, according to data from auditing and consultancy firm KPMG.

While Blackstone is one of a handful of private-equity players to complete a takeover deal for an Indian company, Gupta said he expects the sector to remain dominated by minority investments as controlling family shareholders are reluctant to part with their companies.

“There is a big cultural issue about buyouts,” he said.

“In Brazil, you sell your company, you celebrate, everybody thinks you’re a hero,” said Gupta, who previously worked with Indian conglomerate Reliance Industries (RELI.NS) and has an MBA degree from Stanford University in California.

”Here if you sell your company, unless you get the valuation that Ajay Piramal got, there’s a stigma attached to that sale. You want to give it to your children.

Last year, India’s Piramal Healthcare (PIRA.NS) sold its branded generics business for $3.72 billion to U.S.-based Abbott Laboratories (ABT.N).

India's benchmark stock index .BSESN is down about a fifth this year, and 13 rate increases since early 2010 by the central bank have pushed up borrowing costs.

    Blackstone, which manages about $128 billion globally according to Thomson Reuters data, is one of the most active private-equity investors in India, where it has invested nearly $1.8 billion since 2006.

    While Blackstone does not focus on specific sectors, its investments in India have mostly been in infrastructure, especially power, where it has spent over $800 million on companies that have already have land, captive sources of coal and regulatory clearances.

    Many big power projects in India have been hamstrung by environmental clearances and lack of access to coal.

    While many investors seek to capitalize on rising spending by increasingly wealthy India, Blackstone has largely limited its direct exposure to Indian consumers to its $50 million investment in Jagran Prakashan (JAGP.NS), a leading media house.

    ($1 = 52.7 Indian Rupees)

    (For summit blog: blogs.reuters.

    (Summit desk: +91 22 6636-9138)

    Reporting by Indulal PM and Tony Munroe; Editing by Ranjit Gangadharan and Aradhana Aravindan

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