Blackstone Group LP is set to enter the private debt market in India and expects its first debt transaction in the country soon, Amit Dixit, senior managing director and head of Indian private equity (PE) at the buyout firm, said.
The firm, which manages about $90 billion in credit globally, will make the investments from a fund managed by its specialized Tactical Opportunities Group. It is currently identifying large deals in the Indian market. “Things are in the works. Several deals have gone to our committee,” Dixit said in an interview conducted at the Annual Mint Private Equity Conclave on 23 February in Mumbai.
Currently, the PE firm’s India and Singapore teams are working on classic credit deals such as “promoter financing for an acquisition or a structured equity for a last-mile financing on a project,” he said.
The buyout firm marked the final close of its Tactical Opportunities Fund II at $6.69 billion, with an allocation to Asia and to India in the first quarter of 2016. This fund will pursue opportunistic investments across corporate capital structures and multiple asset classes, including credit, real assets and private equity investments.
Blackstone had closed its first fund, named Blackstone Tactical Opportunities Fund I LP, in March 2014 at $5.6 billion. Blackstone’s Tactical Opportunities Group is a PE general partner firm with offices in Singapore, the UK and US.
Blackstone is one of the largest asset management companies with over $367 billion in assets under management. It has been investing in India for 12 years, and has committed about $6.4 billion—divided equally in its real estate and PE funds. Typically, Blackstone invests in transactions over $100 million.
In a panel discussion on private debt at the Mint conclave, industry leaders were of view that though PE has been the preferred choice of capital for companies and promoters to fund growth, private debt is slowly but steadily emerging as a suitable alternative without divestment of equity.
Improved market sentiment and the passing of the bankruptcy code have encouraged foreign and domestic fund managers to bet big in the private credit space. About 12 private debt funds were set to raise $5 billion in investor commitments in 2016, the highest ever in any year, according to data provided by London-based market researcher Preqin in December 2016.
Of the total 15 India-focused private debt funds raising capital, four have adopted the distressed debt strategy to raise a combined $3.2 billion, about 60% of the total private debt fund-raising in 2016.
The private debt market in India currently has a few large firms—such as KKR, which has till date lent over Rs30,000 crore, Ajay Piramal’s Piramal Fund Management and AION Capital, a joint venture between ICICI Ventures and Apollo Global Management.
However, several new investors have shown an interest in starting private debt businesses. Mint reported in February PE Barings PE Asia is raising an onshore fund of Rs750 crore and an offshore fund of almost $500 million to tap the private debt market in India.
Talking about the distressed opportunity, Dixit said there is so much of exuberance about India’s distressed debt opportunity, but the reality is quite different as no real distressed transactions are happening, except a few deals here and there on ARCs.