Blackstone gearing up for third crucial exit in India

Eyes exit in India's largest business correspondent services provider - Fino PayTech

The Blackstone Group, among the top private equity funds globally, is understood to be readying for its third important exit from a slew of poor performing bets in India.

The fund, which has investments of about $2.5 billion in a clutch of 26 transactions, is understood to be in various stages of scripting its exit from Fino PayTech, India's largest business correspondent services provider.

This move to exit Fino PayTech comes hardly a few weeks after Blackstone signed a healthy deal to exit Emcure Pharmaceutical for Rs 650 crore in favour of another global private equity player - Bain Capital.

Blackstone earned close to three times on this investment made during 2006. Prior to Emcure's exit during 2011, Blackstone had exited Intelenet Global Services, a BPO player, taking back at least two times its investment of close to $200 million.

Fino PayTech is India's largest alternate channel for banking and business correspondent service provider created in 2006 by a consortium of banks and other sectorial entities.

It provides banking technology and infrastructure services to financial institutions and has over the past seven years empowered over 70 million customers through over 30,000 transaction points in 499 districts across 26 states in India.

Fino works with many national and private banks in their efforts to reach out to the unbanked and underserved population to overcome the challenges of serviceability and scaleability of the traditional banking channels. According to information available, Fino PayTech has revenues of Rs 300 crore and works on an operating margin of around 14 per cent.

According to senior investment bankers, Blackstone is understood to have mandated a boutique investment bank to find buyers for its stake in Fino and is understood to be looking at at least Rs 250 crore to exit. Blackstone had invested Rs 150 crore in 2011 for a 21 per cent stake.

In addition to Blackstone, Fino raised funding from Intel Capital, Headland Capital Partners, International Finance Corporation, ICICI Bank, ICICI Lombard, Corporation Bank, Union Bank of India, Indian Bank. When contacted, Fino said that Blackstone is and remains its key stakeholder.

"We are not aware of any such move and as a practice, we do not comment on any speculations," the spokesperson for Fino said.

Blackstone also said they do not comment on speculation.

In addition to this exit which is being planned, Blackstone is also understood to be in the final stages of scripting an exit from Bangalore-based Synergy Property Development Services with at least 3x returns.

Blackstone, which has been investing in India from late 2005, has made bets on companies such as Gokaldas Exports, NCC, MTAR Techno-logies, Financial Technologies among others which is proving to be a major headache given the context that the value of these companies has dropped drastically due to various external factors.