Blackstone picks 50% in Gokaldas for $165 million PE Major Seals Biggest Deal In The Domestic Appare
THE Indian arm of the NYSE-listed Blackstone Group has sewn the biggest deal in the domestic apparel industry, acquiring a 50.1% stake in Bangalore-based Gokaldas Exports (GEL), the country’s largest garment exporter. A press release issued by GEL said Blackstone would be investing close to $165 million (Rs 682.1 crore at current exchange rate). The company, which had gone for an IPO in March 2005, has an employee strength of 47,000 across 46 facilities with a capacity to produce and export 2.5 million garments a month. The acquisition will also see the private equity (PE) player making a mandatory “open offer” for 20% of the outstanding shares. GEL, which counts brands like GAP, Nike and Reebok as its customers, had gone for a listing in March 2005. The GEL-Blackstone deal comes close on the heels of the Mumbai-based Bombay Rayon Fashions acquiring a majority stake in Leela Scottish Lace for $38 million (Rs 155 crore) in July this year. ET had spoken of a deal in the offing with Blackstone Group in its edition dated August 6. “With its global reach and deep relationships, Blackstone is an ideal partner to help us realise our vision of building a global industry leader. Blackstone is a long-term partner and intends to work with us to deepen our customer relationships and accelerate our growth plan,” said GEL executive director Rajendra Hinduja. “This favourable industry dynamic combined with our highest regard for the management team of Gokaldas Exports were key factors in our decision to enter into this partnership. We are looking forward to using our global network in contributing to the growth of the company in a meaningful way,” said Blackstone Advisors India CMD Akhil Gupta. Mr Hinduja told ET that it would be work as usual at the company, though there would be changes at the board level, which would be expanded to include three nominees of the PE player while Madanlal Hinduja would continue to be the chairman of the company. The board of directors includes former Crisil MD Pradip Shah. It is believed that the Hinduja brothers (Madanlal, Rajan and Dinesh) would be investing the proceeds from the stake sale in the apparel SEZ planned by the group. The GEL stock closed on NSE at Rs 229.1 against Friday’s closing price of Rs 223.05. For the first quarter ended June 30, 2007, GEL’s total income stood at Rs 266.94 crore (Rs 223.79 crore), indicating a rise of 19.28%, though thanks to the northward movement of the rupee, the net profit dipped 22.13% to Rs 10.52 crore (Rs 13.51 crore).