Blackstone to invest $150mn in NCC

Blackstone Group, the global private equity firm, will buy a 14.5 per cent stake in Hyderabad-based Nagarjuna Construction Company Limited (NCCL) for $150 million (about Rs 615 crore), one of the largest-ever foreign investments in the construction sector in India.

Blackstone will buy equity in two tranches, through an allotment of 20.24 million equity shares of Rs 2 each at a premium of Rs 200.50 (equivalent to about $100 million) and 9.1 million warrants (with an exercise period of 18 months) of Rs 225 a warrant, with each warrant convertible into a equity share of Rs 2 each at a premium of Rs 223 (equivalent to about $50 million).

Nagarjuna Construction intends to use the funds for additional investments in public-private infrastructure projects and to expand its capital base, which would help it bid for larger projects and strengthen its position in the market.

"This is one of the largest investments by Blackstone in the construction sector in

India," Kotak Investment Banking Associate Director Devyani Khanvilkar told Business Standard.

Kotak Investment Banking and SSKI are advisers for NCC and Blackstone, respectively.

Blackstone will also get representation on the board of Nagarjuna Construction.

"We welcome Blackstone as a long-term partner. With its global reach and proactive approach Blackstone brings immense value to the company market," A Ranga Raju, managing director, Nagarjuna Construction, said in a statement.

NCC is the third largest construction services company in India, and through its subsidiaries, owns several infrastructure assets on a build-operate-transfer basis.

The company has been involved in road, water, buildings, electrical works and irrigation projects and has recently expanded into power, oil and gas, and metals.

Akhil Gupta, chairman and managing director, Blackstone Advisors India Private Limited, said planned infrastructure expenditure, economic growth and urbanisation would drive long-term growth in India's construction sector.

NCC will hold an extraordinary general meeting on September 24 to obtain the approval of shareholders for the issue of shares and warrants.

This is the fourth deal by Blackstone in India this year. The company acquired majority control in Gokaldas Exports for about Rs 660 crore, the largest management buyout in the textiles industry.

It has invested $275 million in Ushodaya Enterprises, which runs the Eenadu newspaper and ETV franchise, and also had another management buyout of BPO firm Intelenet from Barclays and HDFC for Rs 840 crore.