Blackstone dodges worst of Asia’s exit angst
08/04/2024 04:35
(The author is a Reuters Breakingviews columnist. The opinions
expressed are her own.)
By Shritama Bose
MUMBAI, April 8 (Reuters Breakingviews) - Blackstone’s
BX.N nearly two-decade-long punt on India is paying off in two
ways. The U.S. buyout firm is preparing to float more businesses
in the country’s buoyant capital markets, including an
Antwerp-based diamond certification firm at up to 6 times the
value it paid for it last year, according to Reuters. Its
strategy to go heavy on the South Asian country once looked
lucrative but quirky. Now others are rushing to emulate it.
Private equity firms around the world are sitting on $3
trillion of unsold, ageing investments and a freeze in initial
public offerings makes it hard to return money to investors.
These problems are particularly pronounced in Asia, where many
regional funds including PAG and Carlyle CG.O put a big focus
on China – a market U.S. investors are now cutting allocations
to at steep discounts.
Blackstone has a partial shield against that problem. It has
a tiny 3% of its Asia-focused private equity funds deployed in
the People’s Republic. It’s less exposed to the pullback of
capital from the world’s second largest economy and to Beijing’s
attempt to prop up its battered stocks, including by blocking
big IPOs like Syngenta.
By contrast, India is Blackstone’s third biggest market
globally by equity investments after the U.S. and UK. Its Asia
head of private equity, Amit Dixit, is based in Mumbai, and he’s
doubling down where the firm has generated its best private
equity returns globally.
What’s more, it looks easier than ever to exit investments
in the country. Some $7.4 billion was raised through primary
issues in India in the year to March, 19% higher than in the
previous 12-month period, according to Prime Database. Recent
Blackstone exits include Embassy Office Parks REIT EMBA.NS and
automotive component maker Sona BLW Precision SONB.NS .
Overall exits in the country by private equity and venture
capital investors in 2023 hit a record volume of 303 and were
valued at $24.8 billion, half via open-market deals, according
to EY and the Indian Private Equity & Venture Capital
Association. Next up, Blackstone is looking to sell shares worth
$950 million in the International Gemological Institute, which
has most of its business in India, and mortgage financier Aadhar
Housing Finance.
Asian funds trying to raise capital are busy assuring
investors that they won’t deploy more than 20% of the pot into
China. They are also trying to convince investors that they can
spend money in alternative markets as effectively as firms like
Blackstone that ramped up much earlier. India’s market isn’t
perfect, but at least it is open for business.
Follow @ShritamaBose on X
CONTEXT NEWS
Blackstone is exploring raising $300 million via an initial
public offering in India of the International Gemological
Institute (IGI), less than a year after it acquired the company,
Reuters reported on April 2, citing three unnamed people
familiar with the matter. The company is targeting a valuation
of up to $3.5 billion, according to two of the sources.
The U.S. private equity giant is also targeting an up to
$650 million IPO for Indian home loans provider Aadhar Housing
Finance at a valuation of up to $3 billion, Reuters reported on
Jan. 30, citing two unnamed sources with direct knowledge.
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Graphic: Indian IPO volumes have been buoyant https://reut.rs/3xChHis
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(Editing by Una Galani and Katrina Hamlin)
((For previous columns by the author, Reuters customers can
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shritama.bose@thomsonreuters.com; Reuters Messaging:
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