Thursday, March 27

The Buyout Boys

Blackstone’s headquarters on the fifth floor of ExpressTowers in Nariman Point, Mumbai’s upscale central business district, are strangely uninspiring. It’s difficult to believe that the private equity giant strikes multi-million-dollar deals in India, buys local companies overnight and rescues promoters of family-run businesses out of these premises. There are no life-size portraits of Blackstone chief Stephen Schwarzman — who makes headlines quite consistently with his extravagant birthday bashes and luxurious Palm Beach residence — in sight. In fact, for an industry that faces constant public bashing for over-the-top lifestyles of its founders and the shockingly huge profits they make, the lack of glamour is particularly striking.

And Mr Blackstone in India, as he is commonly referred to among young bankers, is equally low-profile. Akhil Gupta, 55, chairman and managing director of Blackstone Advisors India and the complete anti-thesis of his boss Schwarzman, sits in a modest corner room. Only the view (of the Arabian Sea) is exceptional. Even the office activity is low-key. Besides Gupta, there’s barely anyone in office around mid-morning, except a couple of analysts glued to their screens. The office comes alive usually on Mondays when the principals of the firm in India, Mathew Cyriac and Amit Dixit, get into long-drawn meetings with Gupta to discuss potential deals and share research reports.

Standard procedure includes turning down deals that are less than $20 million, focusing on those that are more than $50 million and usually zeroing in on transactions that have a floor of $75 million. Gupta says that so far he has analysed 600 deals, taken 20 to Blackstone’s investment committee in New York and closed seven. And Blackstone hasn’t gone around hunting for companies, he adds. Most of these deals have come to the firm. “Whenever any of us gets a deal, we circulate it and focus on some key parameters, such as, how the company is competitively positioned in the marketplace, whether we will be able to work with the entrepreneur involved, and the corporate governance practices of the company,” says Gupta. He has a point. He can’t go about replacing CEOs, as private equity firms typically do in classic buy-outs.

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