Global private equity giant Blackstone, renowned for managing a staggering $1 trillion in assets, has unveiled a bold initiative to infuse a substantial $25 billion into India over the upcoming five years. This ambitious investment plan reflects Blackstone’s profound confidence in India’s economic potential, positioning the nation as its third-largest investment destination, following the United States and the United Kingdom.
Jonathan Gray, the Chief Operating Officer of Blackstone, emphasized India’s allure as an investment hotspot, attributing it to the nation’s impressive growth trajectory coupled with a scarcity of capital, which paves the way for the prospect of higher returns. Gray elucidated, “The fact that you have had a lot of growth but haven’t had a ton of capital creates the opportunity to produce higher returns.”
The decision to intensify Blackstone’s investments in India stems from the success of previous ventures in the region. Furthermore, with a substantial reserve of $200 billion in ‘dry powder,’ Blackstone perceives India as a lucrative prospect amidst the slowdown witnessed in advanced economies. Factors such as global companies diversifying their manufacturing bases, the availability of exit routes through developed equity markets, and the potential for further reforms add to India’s attractiveness as an investment destination.
Gray highlighted India’s promising performance in stock market returns over the last 10-20 years, positioning it as the second-best performer in dollar terms. He remarked, “India has become a place where more and more global investors are focused. It feels to me like the momentum is building, not slowing.”
Addressing historical concerns regarding liquidity in the Indian market, Gray noted a significant improvement, particularly in the private market for large-sized assets. He stressed the confidence instilled in global investors by the assurance of liquidity through exit routes, primarily via public markets.
Blackstone’s investment strategy entails a $25 billion increase in asset value, comprising $17 billion in fresh investments and $7.5 billion from gains in its existing portfolio. Amit Dixit, Blackstone’s India head, elucidated that the company plans to inject $2 billion of fresh capital into India annually.
“Our focus is on the rising middle class, and sectors impacted by that transition,” said Gray. “Building businesses that build India is the core theme at Blackstone,” he added.
Jonathan Gray of Blackstone has identified key areas for reform within India’s mergers and acquisitions (M&A) landscape. Contrasting the regulatory environment with that of the United States, Gray pointed out that while a 51% shareholder vote suffices to take a company private in the US, the threshold in India stands significantly higher at 90%. He emphasized the importance of facilitating smoother exits for companies facing financial challenges, advocating for a more rational process of capital recycling.
Gray further highlighted the prolonged timeline for mergers in India compared to the US, where transactions can be completed within months rather than years. He stressed the need for harmonization with global standards, particularly concerning regulations governing Real Estate Investment Trusts (REITs), to attract greater investor participation and ensure parity with other investment avenues.
As the country’s largest landlord, Blackstone boasts an extensive real estate portfolio spanning office spaces, retail properties, logistics hubs, and data centres. Beyond real estate, Blackstone focuses on acquiring controlling interests in businesses and driving operational improvements. Recent achievements include the acquisition of CARE Hospitals in collaboration with KIMS HEALTH, the successful transformation of Sona Comstar into India’s premier EV auto components company through a 2021 IPO, the transition of IBS Software into a Software-as-a-Service (SaaS) provider, and the elevation of Mphasis into a global leader in cloud migration services.
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