The Blackstone Group, a prominent private equity firm headquartered in the US, intends to bolster its investments in India by injecting an extra $25 billion into the nation's economy. Their primary emphasis will be on infrastructure, data centers, and logistics, building upon their existing $50 billion investment.
“Blackstone continues to escalate its investments and perceives an opportunity to enhance the value of its PE assets by $25 billion over time, allocating $17 billion to new investments and $7.5 billion to value creation across its current portfolio companies”, said Jonathan Gray, president and chief operating officer of Blackstone.
Blackstone's India Senior Managing Director, Amit Dixit, has announced an annual investment commitment of up to $2 billion. This declaration was accompanied by Gray, who stressed the need for expedited clearances for mergers and acquisitions in India, as well as improvements in commercial dispute resolution processes. Gray also highlighted the challenges of privatizing a company in India, citing the requirement of 90 percent of all outstanding shares to vote, which he described as a 'mathematical impossibility' in securing those votes.
“As a result, India currently hosts 7,000 public companies, nearly double the US despite having a market capitalization one-tenth its size. I believe one factor that could facilitate market unlocking here is the ability to take a company private, enhance its operations, and then reintroduce it to the market with increased scale”, Gray noted.
“In the US, mergers can be concluded within several months, unlike in India, where the process often takes several years, thus impeding activity that could otherwise benefit the system”. Gray commended the government’s efforts in developing the real estate investment trust (Reit) market but suggested further reforms to foster its growth.
“The Indian government has made commendable strides in the Reit market, enabling the creation of public Reits such as the Embassy and others we’ve been involved in. Each incremental change made by the government simplifies the process further, enhancing business value and attracting more capital, thus facilitating a virtuous cycle”, Gray remarked.
Gray, speaking about Blackstone's investment focus, highlighted logistics, data centers, and hotels as particularly appealing sectors. He expressed optimism about hotels, citing promising fundamentals in the segment. Additionally, Gray mentioned Blackstone's interest in value-added exporters, healthcare, and consumer-centric businesses for the private equity vertical.
“Companies like Sona Comstar serve as excellent examples of entities we seek those with a global export presence. This rising middle-class phenomenon, which could be health care and financial services, could be related to travel. All of that, I think has a lot of runway. The global energy transition presents another crucial area for India’s growth”, Gray said.