Report: Indian regulations stall $50m Blackstone deal

Blackstone is unlikely to finalise its deal for an increased stake in Indian construction company, Nagarjuna, owing to regulatory delays. It comes though after the country's plunging stock market wiped 68 percent from the value of the assets.

The Blackstone Group is not expected to finalise a previously-agreed deal to invest $50 million (€36 million) into the Indian construction and infrastructure operation, Nagarjuna Construction Company, according to media reports.

Blackstone has been waiting for 14 months for approval from the Foreign Investment Promotion Board to purchase $50 million of warrants from the company, the report from Livemint said.
However the regulatory delay could work in favour of the New York-based private equity and real estate firm – after the value of the Nagarjuna' warrants fell by around 68 percent because of falling stock markets in India.
Nagarjuna’s executive director, A G K Raju said he didn't believe Blackstone would exercise the option to buy the 9.1 million warrants at the agreed deal price of 225 rupees a share when the stock was now available at a cheaper price on the open market.
Raju added the company had started exploring alternative avenues for funding raising.
In August 2007, Blackstone agreed to invest $150 million into Nargarjuna. Listed on the Bombay Stock Exchange, Nagarjuna owns several infrastructure assets through subsidiaries on a build-operate-transfer basis. Its construction services business operates in the road, water, buildings, electrical works and irrigation segments, and the company recently expanded into the power, oil and gas, and metals segments.

The report said Blackstone would also be unable to buy lower-priced Nagarjuna shares on the open market however, as the firm already owns almost 10 percent of the company’s shares – the maximum allowed by a foreign institutional investor. Blackstone India’s senior managing director and chairman, Akhil Gupta, said in the report it was too early to say whether the firm would exercise the warrants.