The latest public offering from the US-based private equity firm, the listing of diamond and jewellery certification firm International Gemmological Institute (IGI), will be its seventh profit booking milestone this year.
The selloffs assume significance as Blackstone is in the process of raising its third Asia fund targeting at least $10 billion, according to news reports. Typically, investors want to see previous fund exits at the time of new fundraising.
IGI will launch its initial public offering (IPO) today to raise ₹4,225 crore. Of this, Blackstone will pocket ₹4,050 crore ($477 million at the upper end of the issue price) from selling 23.5% stake through a combination of offer for sale and the sale of shares in IGI’s overseas entities. The PE firm currently holds 100% stake in IGI.
IGI’s IPO valuation has been set at around ₹18,612 crore ($2.19 billion) on the upper end of the price band, which translates to close to 4X in unrealised gains in less than two years since investing.
According to a person familiar with developments in the company, other partial exits this year include PGP Glass, which fetched Blackstone around $150 million through a dividend recapitalisation—where a company takes on debt to pay its shareholders a special one-time dividend. Blackstone had earlier considered a secondary stake sale of its shares, but abandoned the process after valuations were unsatisfactory, the person said.
The PE firm also sold some stake in wealth platform ASK Holdings to its wealth clients, taking out around $120 million.
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Earlier in June, Blackstone sold 15% stake in IT services company Mphasis for ₹6,700 crore ($790 million), after offloading a partial stake of around ₹2,000 crore ($235 million) in Aadhar Housing Finance at the time of the company’s IPO in May.
In August, it sold a portion of its shares in real estate investment trust Nexus Select Trust for ₹4,335 crore ($510 million). In October, Mint reported that Blackstone is booking a partial exit from visa outsourcing and technology services platform VFS Global for $950 million.
To be sure, despite all these sales, the company is sitting on vast unrealised gains as it still holds stake in most of the companies.
For instance, Blackstone will continue to hold 76.5% stake in IGI after selling 23.5% in the IPO. In Aadhar Housing Finance, it holds over 75%. In Nexus Select Trust, it holds around 21% stake; in VFS it holds over 50%. It holds a little over 40% in Mphasis and owns at least 90% in Ask Holdings, according to data from the exchanges and the person cited above.
On Monday, Blackstone announced the price band for IGI at ₹397-417 per equity share. The anchor portion, which will be announced on Thursday, is expected to see participation from global sovereign wealth funds as well as large domestic mutual funds.
Blackstone first invested in IGI when it acquired stake from Chinese firm Fosun International as well as IGI’s promoters for $570 million in May 2023.
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Pointing out that IGI has transformed a lot since Blackstone acquired stake in the company, Prateek Roongta, managing director of Blackstone Advisors India Pvt Limited, said, “What we bought was a loosely held confederation of diamond certification operations in 10 countries. What we are selling is a consolidated world leader in diamond certification, one IGI. We integrated them, brought people together.”
The PE firm also bolstered the management team after taking over and put in place plans for a new marketing strategy. “From hiring key CXOs across functions to building a single strategy, Blackstone has been involved in taking the company to the next level of growth unlocking,” Roongta said.
“PE funds have come a long way from making minority investments to buying out entire companies and then making bolt-on acquisitions to create size and listing these companies after creating value with new management and positive intervention,” says Bhavin Shah, partner and leader, private equity and deals at PwC India.
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According to Shah, just a few years ago, it was very difficult to expect a fund’s ability to sell the entire stake to public on the exchange. But given the depth of the market, with domestic mutual funds investing and regular inflow of money, it is now possible to sell large stakes in a few lots in the market to completely exit the investment.
