Investing in India? See Blackstone losses first January 24, 2009
Posted by dhirendra08 in Blackstone Croups, Capital Market, Equity Firm, Foreign Capital, Indian Investment, Private Equity, Stock Market Plundge, Weakening Economy.Tags: Assets, Economy, Equity, Firm, Groups, Investment, Stock Market
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Good morning friends. In spite of a slowdown of economy, India is still growing considerably. There are companies and projects are in need for foreign capital.
Blackstone Group has invested more than $730 million in India since arriving three years ago, only to see much of it wiped out by the country’s weakening economy and stock market plunge.
Blackstone’s tough start in India is a cautionary tale to other Western private equity firms such as Kohlberg Kravis Roberts & Co. and Permira that are opening offices in Mumbai. If newcomers weren’t already wary of India’s foreign investing rules, which forbid borrowing and set a purchase price range, certainly Blackstone’s performance so far may give them pause. Entrenched firms, too, are likely to wait before pouncing.
Blackstone is not the only private equity firm watching its Indian investments take a hit, as Warburg Pincus can attest. But unlike Warburg and other private equity players, Blackstone is relatively new to India. It hasn’t been there long enough to sell stakes to balance losses with gains. What’s worse, it appears to have done most of its eight Indian deals at the very top of the market. Blackstone says it remains a long term investor in India.
“Short-term capital market volatility does not alter our investment thesis nor does it impact our commitment to an investee company,” Blackstone India head Akhil Gupta said in an email reply to questions about the portfolio. “We are long term investors who are focused on adding value to portfolio companies over long periods of time.”
New York-based Blackstone, one of the largest private equity firms in the world, launched plans to expand in Asia in 2005, choosing India as its first destination after hiring Gupta from Reliance Industries to run the Mumbai-based team.
India’s economy, despite a slowdown, is still growing significantly. Companies and infrastructure projects are hungry for foreign capital. Foreign money is attracted to future growth prospects and the ability to buy into assets on the cheap. The broader Indian market fell 52 percent last year, its sharpest annual fall after a five-year bull run that saw the benchmark rise six fold.
How quickly the economic climate stabilizes is up for debate.
Ref: The Economic Times
