Tuesday, August 21, 2007

Deal scouting calls for passion

Global private equity giant Blackstone Group is acquiring majority control in Gokaldas Exports for nearly Rs 6.6 billion ($160 m), in the country’s largest management buyout in the textiles industry.

This is Blackstone’s third major deal this year, the other two being a $275 million investment in Ushodaya Enterprises, which runs the Eenadu newspaper and ETV franchise, and a management buy-out of BPO firm Intelenet from Barclays and HDFC for Rs 8.4 b ($ 203 m).

The PE shop known for its appetite for large global deals (Hilton Hotels - $26 b, EOP - $ 36 billion including debt of $16.5 b) appears to have tweaked its strategy in India, settling for a lot smaller deals. I wonder the viability of this strategy since it could eventually lead to problems of scale or even oversight. The string-of-pearls strategy is quite cumbersome for an 11 people strong PE firm to manage on the trot given the bureaucracy it may have to deal with in India.
Of course, one can’t find many companies of the size of a Hilton or EOP in India easily but if they can look closely, they might as well zero in on some real sweetspots. I have earlier written about one here. If approached rightly, it’s a terrific deal at $1.2 billion. There are a few more available if looked at closely, not like a professional investment banker who does it for a fee, but by a committed PE fund manager driven by pure passion for such deals.

If you need help Mr.Akhil Gupta, you know whom to hire :)

No comments: