Blackstone India Head Akhil Gupta said India provided an excellent background for investors. Edited excerpts of an interview with Arijit Barman:
Many in the market question Blackstone’s India commitment, following the news of its decision to close its mutual fund, managed by Punita Kumar Sinha. Are these apprehensions justified? As a listed PE player, are pressures from investors a lot more?
Blackstone has a strong commitment to India, as seen by the fact that our private equity business has committed around $2 billion of capital across 15 firms. A significant amount of it has been committed this year. Our real estate business has committed or invested $800 million. Our third business, M&A advisory, remains active in India.
What gives you the confidence about India? The overall investment climate has taken a beating, amid negative news flows and a policy paralysis.
I am optimistic about the Indian industry. The consensus among economists pegs India to grow between seven to nine per cent annually, which provides excellent background for investors. 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.
What is Blackstone India’s current exposure? You have a $5-billion target. Has there been a revision in your outlook on it?
We do not have any investment targets. However, till date, we have committed $ 2.6 billion in India and have a capacity and ability to invest $500-800 million every year, depending on factors, including the macro environment.
Theoretically, a bear market makes PE investors more aggressive, as valuations get more attractive. So, has there been a change in the investment proposition? Will you, in the short term, look at more public market transactions?
As an asset class, private equity typically takes a long-term view in terms of value creation. Hence PE investing gets less impacted, compared to some of the other asset classes, due to cyclical ups and downs of the economy or the stock market. 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 we could not invest in before due to high valuations.
There were reports that Blackstone will invest $1 billion in five companies. Which sectors look more attractive?
India is primarily driven by domestic consumption. 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.
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You have refrained from real estate investments in the last two years. Is it a good time to enter the space again?
We continue to look at private equity investments in real estate selectively. We have committed $230 million this year in RE.
How do you view the new takeover code in terms of opportunities for PE funds?
We believe this is a progressive step for the Indian economy. This will bring more PE investments into the country and at a faster pace. I must compliment Sebi for this.
Sebi and RBI have both been pressing for more regulations in the sector. Does that make it more difficult to manoeuvre?
India needs to attract FDI to fund growth. Policies have a big impact on the amount of inflows a country can attract. Regulators must access the impact of policies on future investment and undertake cost-benefit analysis before announcing a policy. A conducive regulatory policy framework can help double FDI flows into the country.