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September 08, 2008


Blackstone to buy 14.5% stake in Nagarjuna Construction

It is reported that Blackstone Group will buy a 14.5% stake in Hyderabad based Nagarjuna Construction Company Limited for USD 150 million (INR 615 crore). In addition, Blackstone will also get representation on the board of Nagarjuna Construction. Nagarjuna Construction will hold an extraordinary general meeting on September 24th 2007 to obtain the approval of shareholders for the issue of shares and warrants.

Blackstone will buy equity in 2 tranches, through an allotment of 20.24 million equity shares of INR 2 each at a premium of INR 200.50 and 9.1 million with 18 months warrants of INR 225 a warrant, with each warrant convertible into a equity share of INR 2 each at a premium of INR 223. The investment by Blackstone will be equivalent to 12.2% of the equity on fully diluted basis and the total share of FIIs in equity will go up to 44% from current 32%. The issue will be made to Blackstone GPV Capital Partners Mauritius V-A Ltd, Blackstone GPV Capital Partners (Mauritius) V-H Ltd and Blackstone FP Capital Partners (Mauritius) V FII Ltd.

Mr A Ranga Raju MD of Nagarjuna Construction said that “We welcome Blackstone as a long term partner. With its global reach and proactive approach Blackstone brings immense value to the company market.”

Nagarjuna Construction intends to use the funds for additional investments in public private infrastructure projects and to expand its capital base, which would help it bid for larger projects and strengthen its position in the market. About 60% of the funds will be used for funding projects in power sector and the remaining will go to working capital and other long-term funding needs.

Kotak Investment Banking and SSKI are advisers for Nagarjuna Construction and Blackstone respectively.

Nagarjuna Construction is a construction services company in India, and through its subsidiaries, owns several infrastructure assets on a build operate transfer basis. It has been involved in road, water, buildings, electrical works and irrigation projects and has recently expanded into power, oil and gas, and metals.

This is the fourth deal by Blackstone in India in 2007 besides acquiring majority control in Gokaldas Exports for about INR 660 crore, Ushodaya Enterprises for USD 275 million and BPO firm Intelenet from Barclays and HDFC for INR 840 crore.