Blackstone may set up BPO firm in India

By agencies   |   Tuesday, 30 August 2005, 07:00 Hrs
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MUMBAI: The Blackstone Group, a private investment and advisory firm that manages $14 billion globally, is looking to tap India's offshore services sector for its U.S.-based clients, a top official said on Tuesday.

New York-based Blackstone, which has 40 U.S.-based portfolio firms, aims to invest $25-$50 million in either a joint venture, an acquisition or to set up a business process outsourcing (BPO) firm, Akhil Gupta, head of its India operations said.

"We are keen to participate in the BPO space as we see significant potential for our portfolio companies," he said.

Big global companies such as IBM and HSBC have been setting up shop or outsourcing jobs to India, which has an army of trained graduates who work for a fifth of the cost of their U.S. peers.

"When we were looking to invest outside our traditional stronghold of United States and Europe, we recognized that India has huge wealth-creating potential," said Gupta, a graduate of the Indian Institute of Technology, New Delhi.

"On the demand side, incomes are growing and consumers are getting more aspirational. On the supply side, companies worldwide are under pressure to perform better and India has a huge competitive advantage in the knowledge-based economy."

Analysts estimate that private equity investments in India will more than double to $3 billion in 2005, with a large chunk going to the outsourcing sector, as well as automobile parts makers, health care firms and real estate.

Blackstone will be focusing largely on unlisted firms in consumer-driven sectors such as media, retail, real estate and leisure, Gupta said.

Australia was the biggest destination for private equity, with 38 deals attracting nearly $619 million. China was next, with 25 deals for $598 million, while volume in India rose nearly 56 per cent to $333.5 million.

In May, Blackstone said it had allocated $1 billion for investing in India and was looking at returns of 25 per cent. It also aimed to launch a larger India dedicated fund.

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