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Perspective

The numbers game
Why Blackstone's India strategy isn't paying off

N Mahalakshmi

It would be an understatement to say that private equity in India has boomed in the past few years. Easy money, a surging economy, a growing number of new businesses and the new-found zest for entrepreneurship made it the perfect hunting ground for PE. But over the past couple of years, many PE deals have been put to the test, highlighting the risks associated with investing in privately owned companies.

Blackstone, a name to reckon with in the global private equity space, has had a particularly unremarkable investment history in India, despite it being more active in the publicly listed space. Just why are its bets not paying off? Associate Editor Krishna Gopalan takes a look at the deals it has clinched so far and  decodes what’s gone wrong: Negative carry

In another important development last fortnight, Mukesh Ambani put in a substantial sum to enable Raghav Bahl’s Network18 buy a major chunk of Reliance’s holding in Eenadu, a stake bought three years ago in what now appears to be a deal mired in political controversy. Some media observers think this is part of Ambani’s grand plan to create a media conglomerate, while others see it as a temporary move to use the channel as a mouth-piece for its favoured party before the upcoming elections, reports Senior Assistant Editor Ajita Shashidhar: Networking a way out 

But is there a point that all of us might be overlooking? With this deal Ambani may just have embarked on a media exit — not entry — strategy. Eenadu, for reasons now well publicised, was bought by Ambani neither for purely commercial considerations nor with any strategic intent. Eenadu’s lacklustre performance ever since he bought in, has only diminished Ambani’s chances of making money on his investment. It may stand a better chance if he bundles it with a larger company like Network18 and does a trade sale later. The bigger question is — can Bahl change the complexion of the combined business with this fund infusion? If he is successful, it will result in a profitable exit for everyone. And even if not, Mukesh Ambani would hardly grieve. After all, his group wrote off some ₹5,500 crore in one go after Reliance Telecom’s launch strategy failed. In the meanwhile, some intangible benefits would have been reaped and it is hard to put a number on that.

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