The Blackstone Group

The Blackstone Group, a private investment and advisory firm, has allocated $1 billion for investing in India and is looking at potential returns of about 25 percent in Asia's fourth-biggest economy, its head of Indian investments said Monday.

Blackstone, based in New York, whose private equity fund manages $14 billion globally, will also raise a dedicated fund for India, which could be even bigger than the initial allocation, Akhil Gupta, chairman of Blackstone India, said.

"There are huge opportunities in India, and we are agnostic in our approach," Gupta said. Sectors like hospitality, information technology, telecommunications, retailing and financial services "are all growing," he said.

Gupta said the fund would look to invest a minimum of 1 billion rupees, or $23 million, in the companies that it picks.

"That is just a guideline," Gupta added. "If there is a fantastic opportunity for 100 million rupees, we would still do it."

Globally, the fund looks at investments of at least $100 million in each company, he said.

Analysts estimate that private equity investments in India will more than double to $3 billion in 2005, with a large portion of it going to the outsourcing sector, besides automobile parts makers, health care companies and real estate.

Blackstone, which was founded in 1985, also invests in real estate and corporate debt, and advises firms on restructuring.

"We believe that India has enormous potential and that foreign direct investment can play a significant role in supporting the country's growth," Stephen Schwarzman, chairman and chief executive of Blackstone, said in a statement. (Reuters)

Race is to the swift, Japan consultant advises

Private equity firms in Japan that are eager to do big deals and make profitable divestments need to move swiftly to implement changes to the businesses they own, a consultant to the firms said on Monday.

Private equity is a growing market in Japan, which claims the bulk of new investment in Asia at more than $7 billion, far exceeding the deals staged by South Korea and China combined.

Successful exits, like the stock-market flotation of part of Shinsei Bank by the U.S. buyout firm Ripplewood Holdings last year, have drawn a bevy of competitors in a market still about one-seventh the size of that in the United States.

But long gone are the days when private equity firms could squeeze out profits through balance sheet wizardry and a more hands-off approach to the companies they own, said John Sequeira, a Tokyo-based partner at the global consulting firm Bain & Co.

"Today, 70 to 80 percent of the return for private equity funds will come from real performance improvement to the underlying business," Sequeira said.