Blackstone Ventures in India - Analyst Blog

Amid the ongoing sluggishness in global markets, a unit of The Blackstone Group ( BX ) venture funds in India. According to Reuters , Blackstone, the private equity firm, purchased DLF Ackruti Info Parks (Pune) Ltd. from DLF Ltd. and its partner for $153 million (INR 8.1 billion).

DLF had 67% partnership in DLF Ackruti Info Parks (Pune) Ltd. with the remaining being owned by its partner Hubtown Ltd. DLF Ackruti owned an information technology-based special economic zone in western part of Pune prior to the sale.

We expect new capital investments from Blackstone to reap long-term benefits to the firm. Moreover, offshore investors are in advantageous position as they face fewer restrictions when investing across sectors and are deprived of intricate tax and legal burdens.

Moreover, DLF is suffering from high debt position. The property sale would provide funds to DLF, which holds net debt of more than $4 billion as of September 2011. Furthermore, in an effort to cut debt, the company plans to sell assets worth $566 million by March 2012.

Apart from Blackstone, the global real estate fund of Morgan Stanley ( MS ) is also planning to invest in a residential project in Mumbai, India. According to the source, Morgan Stanley will most likely enter into a deal with Mumbai-based Sheth Developers to invest $100 million to $125 million in the project.

According to data provider Dealogic, India's largest private-equity deal took place in December 2007 for approximately $1 billion. At that time, investors including Temasek Holdings, Investment Corp. of Dubai, The Goldman Sachs Group Inc. ( GS ), Macquarie, AIF Capital, Citigroup Inc. ( C ) and India Equity Partners purchased a stake in Bharti Infratel Ltd., the tower arm of phone-services company Bharti Airtel Ltd.

Despite some short-term anxiety in the capital markets in 2011, the fundamentals were promising for private equity investments in India. A disparity in supply and demand is creating inflationary pressures, leading to rising interest rates, thereby mounting pressure on corporate earnings.

Blackstone currently retains a Zacks #3 Rank, which translates into a short-term 'Hold' rating. Also, considering the fundamentals we are maintaining our "Neutral" rating on the stock.

BLACKSTONE GRP ( BX ): Free Stock Analysis Report

CITIGROUP INC ( C ): Free Stock Analysis Report

GOLDMAN SACHS ( GS ): Free Stock Analysis Report

MORGAN STANLEY ( MS ): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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