Blackstone set to invest $100 mn in Gokaldas Exports

PRIVATE EQUITY WATCH

Blackstone Group, a global private equity fund with $85 billion assets under management, is close to investing $100 million in publicly listed Gokaldas Exports, one of India's largest apparel exporters.

According to market information, Blackstone is likely to pick up 10-15 per cent stake for this investment to fuel Gokaldas' expansion.

A company spokesperson declined to comment on this development. If this investment sails through, it is expected to be one of the largest private investment in a public enterprise (PIPE) in the apparel sector.

Gokaldas is a Rs 1,000 crore apparel exporter, which is looking at tapping into the domestic Indian market as the rising rupee is hitting exporters hard. The majority of this sum is expected to be used to fund its 400-acre, Rs 2,000 crore-special economic zone at Kanakapura, on the outskirts of Bangalore. A spokesperson said they were going through the process of getting approvals for this project, which is expected in the current financial year.

Gokaldas Exports operates through 46 factories in south India, predominantly in Karnataka. During 2006-07, it commissioned two new factories in Mysore and Tumkur and a Rs 15 crore plant will come up in Hyderabad in a few months.

The company currently has an annual capacity to stitch out 30 million garments such as outerwear, innerwear, bottoms, shirts, knitwear etc. Globally, it supplies to companies like Nike, Adidas, GAP, Tommy Hilfiger and Abercrombie and Fitch.

According to a company official, Gokaldas is keenly looking at the retail scene panning out in India and is hoping to leverage this boom. "The domestic market growth is quite promising and a few well-known players have been added to our list of buyers. We expect a good growth in the domestic market and with the entry of bigger retail players, we expect a larger growth and activity in the Indian retail scene," the official said.

The local market currently accounts for 5 per cent of the total sales and this is expected to double in the coming years.

According to Gokaldas, it is expecting a top line growth of 15 per cent during FY08. The company is one of the largest employers in India employing close to 60,000 people.