Global private equity giant Blackstone enters Sri Lanka with US$ 620 billion in assets
Blackstone Group, one of the world’s leading private equity firms, has reportedly entered Sri Lanka, buying a 56.45% stake in Piramal Glass Ceylon PLC for Rs. 6.2 billion as part of the broader acquisition of the Indian giant business in December.
Via PGP Glass Ltd., Blackstone has paid Rs. 11.60 per share to buy 536.331 million shares via crossing and Blackstone has also announced a mandatory offer to remaining shareholders. The acquisition price implies a total enterprise value of Rs. 13.9 billion for the target company, the Daily FT has reported.
Asia Securities Advisors Ltd. has acted as the buy-side advisor and Asia Securities Ltd. acted as the executing stockbroker to the Blackstone Group in its landmark acquisition, the local media report has stated.
This transaction has reportedly reaffirmed Asia Securities’ position as the preferred investment banking and stock broking partner to the most sophisticated investors for cross-border M&A transactions in Sri Lanka.
Piramal Glass makes container glass packaging with a capacity of 1,475 tons per day. It has factories in the USA, India and Sri Lanka.
Sources close to the deal has told Daily FT that Blackstone, which manages US$ 620 billion worth of assets, is excited about its entry into Sri Lanka and the investment in Piramal Glass Ceylon, which is the market leader in the domestic container glass packaging industry apart from exporting to several countries.
“The fact that Blackstone is going ahead with the Piramal venture in Sri Lanka reinforces that the local operations are important to the Indian giant, to step up exports (currently 20-30% of revenue), and the superior manufacturing facility and product design and development knowhow,” they have noted.
“Blackstone is a long-term investor and given its international experience in similar investments and global reach, it will significantly add value to Sri Lankan ventures. From a country standpoint, Blackstone’s entry augurs well for Sri Lanka,” market analysts have been quoted as saying.
In mid-December 2020 Blackstone had signed a deal to acquire Piramal Group’s Piramal Glass for around US$ 1 billion, and that has also been completed this week.
The deal contour includes an upfront payment of US$ 850 million while Piramal Group will get approximately US$ 150 million on achieving certain milestones, to be paid over two years.
Blackstone has a market value of US$ 40 billion in assets in India, making it one of the top 10 business groups in India and Blackstone has invested over US$ 15 billion across Private Equity (US$ 6.9 b), Real Estate (US$ 7.8 b), and Tactical Opportunities (US$ 400 m).
In 2019/20, Blackstone in India had reportedly invested US$ 6 billion across Private Equity (US$ 2.5 b), Real Estate (US$ 3.2 b) and Tactical Opportunities (US$ 300 m). Blackstone’s recent transactions include a partial exit from Essel Propack.
Post the announcement on 11 December 2020, Piramal Ceylon Glass was the most traded stock at the CSE with a turnover of Rs. 1 billion involving 108.4 million shares.
The entrance of Blackstone is a clear indication of Sri Lanka’s growing business potential as well as the confidence foreign businesses have on the island’s economy. Sri Lanka is fast becoming a business hub in the South Asian region given its geographical positioning in the Indian Ocean and the many trade agreements as well as the trade concessions enjoyed by the country. Many foreign business tycoons have visited Sri Lanka and have also expressed interest in exploring business/investment opportunities in the country. The country’s expanding economy has also opened up many business/investment opportunities.
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