Blackstone partially exits Gokaldas Exports

Private equity giant Blackstone has sold 4.5 per cent stake in Gokaldas Exports for Rs 10.48 crores, having lost around 75 per cent or three fourth of the original investment in the process. It sold 1.5 million shares on Monday at Rs 67.65 each. The shares were acquired by ICICI Bank, as per bulk deal disclosure on the BSE.

The PE firm had previously sold 5.6 per cent stake out of its 68.2 per cent holding in June for Rs 16.19 crores through a similar secondary market share sale. At that time it had sold one share for Rs 83.9. Blackstone had acquired a 68 per cent stake in Gokaldas Exports at 158.7 million dollars (over Rs 980 crores) in 2007, had been struggling to keep the business running. Originally Hinduja-owned company Gokaldas failed to perform in last six to seven years, since the time Blackstone bought the majority stake in it. The investor has been putting in efforts to revive the company and it was evident from its sales growth in FY14. Sales grew 16 per cent at around Rs 1,100 crores with operating profit improving as much as Rs 100 crores.

What hit the once flourishing business was the economic slowdown in 2008-09 that ensued immediately after the stake acquisition, this led to heavy loss of orders from the US and Europe. On the other hand, according to the industry experts, usually PE investors let the experienced company promoters run the business even after acquiring it to ensure smooth functioning but in Gokaldas Exports’ case Blackstone made a mistake of taking over the management.