Blackstone Group mulls taking Gokaldas Exports private

The Blackstone Group, a global private equity (PE) player that controls close to 70 per cent in Bangalore-based Gokaldas Exports, is mulling to take the apparel player private this year.

Blackstone had spent around Rs 680 crore to gain control of Gokaldas Exports, a listed company with the distinction of being India's largest apparel exporter, in August 2007.

According to sources, Blackstone is understood to have discussed the delisting option with the promoters of Gokaldas Exports, the process for which is expected to start during the second half of the current year.

While Blackstone could not be reached for comments, Rajendra Hinduja, managing director, Gokaldas Exports, said he was not aware of this development. The promoters of Gokaldas Exports hold 20 per cent, while the publicly-held stocks constitute 11.73 per cent.

As per industry information, Blackstone is looking at pumping in investments to put the growth of Gokaldas on fast track, and subsequently taking the export house public in 5-7 years. Blackstone may then exit at a better valuation. Gokaldas officials also indicate that an inorganic game plan is already being prepared and the company is scouting for apparel exporters in Vietnam.

Gokaldas Exports was incorporated in 1979 and has around 50,000 employees in 46 manufacturing facilities with a system capacity to produce and export 2.5 million garments a month.

The company produces highly-customised apparel for leading US and European brands with strengths in fashion and in-house design.

In addition to the delisting plan, Blackstone is also understood to have expressed its willingness to buy out a few more factories, which are currently owned by the promoters of Gokaldas Exports. The promoters of Gokaldas are in the midst of putting up a 400-acre, Rs 1,500-crore apparel special economic zone (SEZ) on Kanakapura Road on the outskirts of Bangalore.

Of late, the stock of Gokaldas has been steadily inching up and is currently trading at Rs 211 a share on the Bombay Stock Exchange. Industry analysts indicate that Gokaldas Exports is already feeling the benefit of Blackstone's global network leverage. When Blackstone acquired control of Gokaldas, it had paid Rs 275 a share.

"The fact of the matter is that Indian textile exports stand to gain as the Chinese currency is appreciating. If India benefits from this development, Gokaldas being the top exporter will eventually benefit. This is one of the key reasons for the stock to firm up," said an analyst.