Global private equity fund Blackstone has said it can do up to six deals or invest over $500 million a year in India, but also stated that “governance deficit” and “archaic” regulations are the biggest hindrances while operating in the country.
“We have the capacity to do four to six deals per year and invest $500 to $600 million,” the Blackstone India Chairman and Managing Director, Mr Akhil Gupta, told a select group of reporters here.
He, however, added that it should “not be confused” that Blackstone will be definitely doing that many deals. “The best part of our working is that we do not have any set targets... that we have to invest this much every year,” he said.
Mr Gupta declined to give a specific answer when asked about the sectors that excite him the most at present.
However, he was very vocal when asked about the challenges and mentioned “archaic regulations built for some other times”, which prevent smooth sealing of deals and the “governance deficit” that has emerged in light of recent controversies as the major difficulties when it comes to operating in India.
Blackstone, more famous for its buyouts, has closed 17 deals and invested $1.8 billion since starting India operations six years ago, the latest being the acquisition of a significant minority stake to become the single largest shareholder in financial inclusion facilitating firm FINO for Rs 150 crore.
“We were a team of three when we started out, now we are 17. Hence, we can do that sort of deals,” he said.
Cultural issues
However, Mr Gupta said India is still some years away from buyout deals, unlike the West, where Blackstone has made a name for itself by closing such deals.
There are cultural issues that arise from the fact that entrepreneurs build businesses to be passed on to the next generation and are averse to the idea of selling-off the company, he said.
Secondly, entrepreneurs in India are not focused; getting around the system and managing to survive in a difficult situation becomes their core competence and they end up entering multiple sectors, which is not so good for buyouts, Mr Gupta added.