Blackstone India can invest $500-800 mn a year: Gupta

With a little over 15 investments and $2.8 billion deployed in the country, it is one of the most aggressive private equity (PE) investors in India.

At a time when many have been speculating about Blackstone’s India strategy, ever since it decided to divest its India-focused close-ended mutual fund scheme to Aberdeen, chairman and managing director Akhil Gupta has made it very clear the PE major is in India for the long haul.

“The Indian economy is expected to continue to outpace global growth under all probable scenarios by a wide margin for the next 10 years at least,” said Gupta, in an exclusive interview with Business Standard.

Gupta, 59, has been driving the India operations of Blackstone, the New York headquartered financial services powerhouse, from its inception six years ago, after a stint with Reliance Industries. Blackstone’s private equity division has already committed around $2.8 billion in India. Moreover, its real estate business has made an additional $800 million. But Gupta adds, “We have the capacity and ability to invest $500-800 million every year, depending on factors, including the macro environment,” without getting into sectoral details.

“India is primarily driven by domestic consumption and hence sectors capitalising on domestic demand are likely to see maximum PE investments. India is expected to attract $1 trillion in infrastructure — that should also open opportunities for PE investments,” Gupta adds.

The fund has been very aggressive on infrastructure, especially power, and has in the last one and a half years made three investments in Visa Power, Monnet Power and Moser Baer’s renewable energy company. Blackstone made its largest investment in India so far in Moser Baer, putting in $300 million this year.

Blackstone, unlike many of its peers, does not have an India-dedicated fund yet and is bankrolled by a global pool. So, that gives it extra leeway to take longer bets and puts less pressure on deployment of capital. Many of its investments in listed portfolio companies from Gokaldas Exports to Nagarjuna Construction Company have seen over 50 per cent value erosion, but Blackstone is in no hurry to exit and can hold on.

“At Blackstone, our focus is to build the competitive positioning of our existing portfolio companies by increasing market share, making select acquisitions, and investing in quality companies run by outstanding management teams that we could not invest before due to high valuations,” he says.

Blackstone, however, has made its first exit in India, cashing out of BPO company Intelenet earlier in the year, and in the process making a neat 200 per cent return on a $203 million investment made four years ago. Typically, PE funds like Blackstone look at a 5-5.5 year investment horizon before exploring exits. By that yardstick, time is on its side, with an average two and a half year portfolio age.