The world's largest private equity firm took two contrarian bets in India nearly two years ago. Making them work will be quite a challenge
Rajendra Hinduja is busy crafting an epoch of transformation at his garment exporting firm in Bangalore.
A 1,000 kilometres away at Malad in Mumbai, Susir Kumar and his senior managers are drawing up the strategy to win the largest contract yet for their business process outsourcing (BPO) firm focussing on banking and financial services sectors.
Hinduja and Susir Kumar represent two diverse industries, but their companies have several things in common. Both are labour-intensive businesses depending on outsourcing orders from the West. And in the world of investment, they are both out of fashion.
Hinduja’s Gokaldas Exports and Kumar’s Intelenet have another thing in common: Both were bought by the world’s largest private equity (PE) firm some 20 months ago. Blackstone Partners owns the companies, letting their previous owners still run them, on the basis of one assumption: It can unlock hidden value in these companies that will disprove the conventional wisdom about them. And make 200 percent profit in five years.
There was one man behind Blackstone’s acquisition of Gokaldas and Intelenet, much against the consensus of the market: Akhil Gupta, managing director of Blackstone India.
Gupta and his team believe they can make both Gokaldas and Intelenet more efficient and profitable. This will be achieved in three steps. One, Blackstone will leverage its professional management expertise to improve operations. Two, they will help the companies scale up globally. The third approach is the key. Blackstone will get the companies it has invested in globally to outsource their needs to Gokaldas and Intelenet, keeping the business with the family as it were.
(This story appears in the 04 June, 2010 issue of Forbes India. To visit our Archives, click here.)