The board of Hyderabad-based Nagarjuna Construction Company, a leading Indian construction company, has approved an investment of USD150m by funds managed by the Blackstone Group through a
The board of Hyderabad-based Nagarjuna Construction Company, a leading Indian construction company, has approved an investment of USD150m by funds managed by the Blackstone Group through a fresh issue of shares and convertible warrants.
Following completion of the deal, Blackstone will have representation on the Nagarjuna board. Kotak Investment Banking and SSKI acted as investment banking advisors to Nagarjuna and Blackstone respectively in the transaction.
Founded in 1978 by A.V.S. Raju and currently led by his son, managing director A. Ranga Raju, Nagarjuna is the third largest construction services company in India, and through its subsidiaries owns several infrastructure assets on a build-operate-transfer basis.
Its construction services business operates in the road, water, buildings, electrical works and irrigation segments, and the company recently expanded into the power, oil and gas and metals segments. Nagarjuna is listed on the Bombay Stock Exchange and on India’s National Stock Exchange.
‘We welcome Blackstone as a long term partner,’ Ranga Raju says. ‘With its global reach and proactive approach, Blackstone brings immense value to the company. This investment will allow us to make additional investments in public-private infrastructure projects, and will expand our capital base, enabling us to bid for larger projects going forward and strengthening our strategic positioning in the market.’
‘We believe that planned infrastructure expenditure, economic growth, and urbanization will drive long term growth in India’s construction sector,’ says Akhil Gupta, chairman and managing director of Blackstone Advisors India.
‘It is a privilege to invest alongside a superb management team in a leading company in one of India’s accelerating growth sectors. We look forward to supporting the continued growth of the company as it delivers on its long-term growth plan.’
Blackstone funds will invest equity in Nagarjuna in two tranches. Blackstone will be allotted 20,246,900 equity shares of INR2 each at a premium of INR200.50 (some USD100m) and 9,111,111 warrants with an exercise period of 18 months of INR225 per warrant, with each warrant convertible into one equity share of INR2 each at a premium of INR223 (USD50m).
An extraordinary general meeting of the members of the company is scheduled for September 24 to obtain approval for the issuance of shares and warrants on a preferential basis.
The Blackstone Group is a leading independent alternative asset manager with businesses including the management of corporate private equity funds, real estate opportunity funds, funds of hedge funds, mezzanine funds, senior debt funds, proprietary hedge funds and closed-end mutual funds, as well as financial advisory services including mergers and acquisitions advisory, restructuring and reorganisation advisory and fund placement services.
