Credit crunch won't derail buyouts: Blackstone

Blackstone Group, the world's largest private-equity fund, said buyouts in India will be unaffected by tight credit markets as most deals in the country are small and not financed by debt.

New York-based Blackstone on yesterday announced its second buyout in the country in less than three months. It expects to continue buying companies at the normal pace, Akhil Gupta, chairman of Blackstone Advisors India, said yesterday in an interview.

"The current global credit crunch is a unique situation,'' he said. "India deals aren't going to be affected by that.''

Private equity and venture capital investments in India almost doubled to $5.55 billion in the first half, according to Chennai-based Venture Intelligence, which tracks such deals.

Rising funding costs that have made leveraged buyouts costlier in many developed countries won't impact India since regulations don't allow debt-funded takeovers, Gupta said.

"The deal sizes in India are a lot smaller and the laws anyway don't permit much of a leverage,'' he said. "We may not do lots of deals, but we will do as many good deals as we get."

Blackstone this week agreed to buy a controlling stake in the country's largest garment exporter Gokaldas Exports, in a deal valued at $165 million.

In June, the fund announced a management buyout of call-centre operator Intelenet Global Services, Barclays, the UK's third-biggest bank, and Housing Development Finance Corporation (HDFC), the country's second-largest mortgage lender.

The average deal size in the first half was $33 million, up from $22 million in the year-earlier period, said Arun Natarajan, chief executive of Venture Intelligence.

"There's about $5 billion of India-dedicated funds lying unutilised and that has to find home only in India, nowhere else,'' Natarajan said.

"To that extent, the deal flow will continue irrespective of the global credit market conditions.''