INDIA BUSINESS WORLD - AUGUST (16th - 31st) 2007
The Month that was ...
US BASED BLACKSTONE GROUP BUYS INTO HYDERABAD'S NAGARJUNA CONSTRUCTION COMPANY
US-BASED private equity (PE) fund Blackstone Group has invested $150 million to pick up a 12.5% stake in Hyderabad-based Nagarjuna Construction Company (NCC), the country's third-largest construction company. The investment has been routed through Blackstone's Mauritius subsidiaries.
Like many other big PE players, the Blackstone Group is bullish on infrastructure investment in India. The $150-million (Rs 600 crore) investment is the largest and first of its kind for the group in infrastructure. The big ticket investment comes days after the PE giant picked up 50.1% stake in Gokaldas Exports for Rs 482.5 crore.
The Blackstone Group may also be open to hiking its stake in NCC further, though these are still early days. Infrastructure spend in India is projected to top $470 billion during the Eleventh Plan against an earlier estimate of $320 billion. PE players like the Blackstone Group are eyeing a slice of the pie.
In fact, the Blackstone Group, along with IDFC and Citibank, is also raising another multi-billion-dollar fund for infrastructure investments in India, said Blackstone Advisors India chairman and managing director Akhil Gupta.
NCC will raise the money through a fresh issue of shares and convertible warrants. The warrants will be redeemable after 18 months, as per Sebi guidelines. Blackstone will also have representation on the company's board.
Kotak Investment Banking and SSKI acted as the investment banking advisors to NCC and Blackstone, respectively, in the transaction.
"With its global reach, Blackstone brings immense value to the company. This investment will not only allow us to make additional investments in public-private infrastructure projects, but will also expand our capital base, enabling us to bid for larger projects going forward and strengthening our strategic positioning in the market," said NCC managing director A Ranga Raju.
"We will support the continued growth of NCC as it delivers on its long-term growth plan," Mr. Gupta said.
To start with, NCC is planning to use the money to fund its BOT projects, including the Machilipatnam port in Andhra Pradesh, 100 mw power project in Himachal Pradesh and 280 mw project in Sikkim.
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