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Business trends

Blackstone accelerates Wall Street charge into India

New York firm allocates largest capital among all emerging markets

The ticker and trading information for Blackstone Group is displayed on the floor of the New York Stock Exchange. The firm has set its sight on India as the next growth center.    © Reuters

NEW YORK -- Wall Street firm Blackstone is accelerating its search for growth in India, which has seen a boom in its private equity market in recent years.

The New York-based private equity and alternative asset management company said Monday it has agreed to commit up to $460 million for a majority stake in Essel Propack, a Mumbai-based specialty packaging company whose clients include L'Oreal and Colgate.

The deal follows Blackstone's acquisition of Aadhar Housing Finance, a leading Indian loan provider, from Wadhawan Global Capital, another local conglomerate, in February for an undisclosed sum.

In his annual letter to shareholders published this month, Chairman and CEO Stephen Schwarzman revealed that Blackstone has deployed more capital in India than in any other emerging market. Since 2006, the company has committed about $10 billion to investments in the country, about half of which went to private equity deals.

India's strong gross domestic product growth and other tailwinds, including Prime Minister Narendra Modi's economic reforms, have made the country an especially compelling investment destination.

Stephen Schwarzman, chairman and CEO of Blackstone, attends this year's World Economic Forum in Davos, Switzerland. The New York-based firm manages $512 billion in global assets.   © Reuters

Meanwhile, India's wealthier but slower-growing neighbor, China, continues trudging through a prolonged trade war with the U.S. while trying to curb an economic slowdown, casting uncertainties over its market.

India also represents one of Blackstone's top performing areas for private equity, Jonathan Gray, the company's president and chief operating officer, said in a February op-ed for the Economic Times.

"In fact, if you ask me which countries in the world have the brightest futures over the next 10 or 20 years, India would be near the top of the list," Gray wrote. "We are big believers in India."

Last year, Blackstone made one of its biggest exits in Asia when it sold Intelenet Global Services, a Mumbai-based business process outsourcing company, for $1 billion to Teleperformance. Blackstone invested $385 million into the company in 2015.

According to a March report by Bain & Company, the total value of private equity deals in India increased to $28 billion in 2018, up 79% from the five-year average, while exit value jumped 164% to $29 billion over the same period.

Though optimistic about India's macroeconomic outlook, the report raised concerns about the increasing competition in the country's private equity market, which has led sellers to post higher prices.

Kiki Yang, a partner at Bain & Company in Hong Kong and author of the report, told the Nikkei Asian Review that many investors are trying to take cues from business trends that occurred in China to identify which companies are going to bring the next wave of growth in India.

"The population, the rising middle class, the internet penetration, the prevalence of e-commerce and the whole ecosystem -- we have looked at a number of things that bear quite some similarities between India and China," Yang said. "Investors will ask questions like -- 'OK, if China is here today, where are we in India?'"

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