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Blackstone's Vision for India: Regulatory Reforms and Investment Focus

Blackstone eyes regulatory reforms in India to boost privatization and M&A, plans $2 billion annual investment.

By Mackenzie Crow

4/3, 17:13 EDT
Blackstone Inc.

Key Takeaway

  • Blackstone Inc. aims for regulatory reforms in India to boost privatization and M&A, enhancing the business environment.
  • Plans to invest $2 billion annually in India, focusing on sectors benefiting from the growing middle class.
  • Identifies regulatory hurdles in delisting and M&A processes, advocating for simpler rules to facilitate capital recycling.

Blackstone's Optimism in India

Blackstone Inc., a leading global investment firm, has expressed a strong belief in the continued robustness of dealmaking activities in India, which ranks as its third-largest market worldwide. The firm's President, Jonathan Gray, highlighted the Indian government's efforts to improve the ease of doing business, such as the introduction of a goods and services tax and changes to bankruptcy laws. These reforms have enabled Blackstone to amass nearly $50 billion in assets under management in India. Gray suggested that further regulatory adjustments, including simplifying the delisting process for companies, expediting mergers and acquisitions, and quicker dispute resolutions, would enhance the business environment even more. He emphasized that such changes would increase business valuations, attract more capital, and foster a positive cycle of investment and growth.

Investment Focus and High Returns

Blackstone has outlined its investment strategy in India, focusing on sectors that cater to the country's burgeoning middle class, such as logistics, data centers, value-added exporters, healthcare, financial services, and travel-related companies. The firm is also keen on exploring opportunities in the energy transition space. Amit Dixit, Blackstone's head of private equity in Asia, revealed that the firm's Indian private equity portfolio has delivered the highest returns across its global operations. Blackstone plans to invest approximately $2 billion annually in India over the next five years, demonstrating its confidence in the Indian market's potential.

Regulatory Challenges and Expansion Plans

Despite its success, Blackstone has identified certain regulatory challenges in India, particularly around the delisting of companies and the lengthy process for mergers and acquisitions. Gray pointed out the difficulty in achieving the required 90% shareholder approval for delisting in India, a threshold he considers nearly impossible compared to lower requirements in the US and other countries. He advocated for a system that allows underperforming or financially challenged companies to exit the public market more easily, enabling more efficient capital recycling. Additionally, Gray noted that mergers in India take significantly longer to complete than in the US and Europe.

Management Quotes

  • Jonathan Gray, President of Blackstone Inc.:

    "They raise the value of businesses, they allow more capital to come in and it really facilitates this virtuous cycle." "Basically, that’s a mathematical impossibility."

  • Amit Dixit, Head of Private Equity in Asia at Blackstone:

    "Blackstone’s Indian private equity portfolio has generated the highest returns firmwide."