Private equity giant Blackstone Group LP will acquire a majority 50.1-per cent stake for $165 million (Rs682 crore) in India's largest garment exporter, the Bangalore-based Gokaldas Exports Ltd, promoted by the Hinduja Group.

Blackstone will have representation on the board of directors of Gokaldas Exports after the acquisition, while the Hindujas will continue to manage the business.

The Rs275-per share deal will see the promoter group's holding decline 20 per cent. The transaction automatically triggers a mandatory public offer of at least 20 per cent that the US investor would be required to buy from the public at the same price.

Earlier in June this year Blackstone had invested in Indian back-office services provider, SKR BPO Services, which had bought over business process outsourcing firm Intelenet Global Services from Barclays Bank and Housing Development Finance Corp.

Prior to that it had invested $275 million in the media business Ushodaya Enterprises in January this year.

Gokaldas has 46 manufacturing facilities with the capacity to produce and export 2.5 million garments every month, and employs 47,000 people. It exports garments to the United States and Europe and its buyers include brands like Adidas, Abercrombie and Fitch, Gap, Nike and Tommy Hilfiger.

Following the elimination of the garment quota regime in 2005, Gokaldas has grown along with the rest of the labour-intensive textile and garments sector.

In the last four years it has recorded growth rates exceeding 15 per cent, though the 10-per cent rupee appreciation during this year has hit the exporter.

About 55 per cent of Gokaldas's revenues come from outerwear, but the company is now also moving into higher-end garments like tailored suits.

Last week Blackstone president Hamilton James had said that the PE group would focus on India for acquisitions valued between $50 million and $500 million apiece. Blackstone and Goldman, Sachs & Co are reported to have been in talks with Power Finance Corp. Ltd for setting up a $1-billion private equity fund for new infrastructure investments in the power sector.

New York-based Blackstone set up an office in Mumbai in June 2005 and allocated $1 billion for private equity investments in Indian companies, looking for potential returns of at least 20 per cent.

Sophia Harrison, Blackstone's VP of European corporate communications, said the PE firm had a pipeline of deals in India, but it was a difficult market to carry out traditional LBOs as companies were still in a growth phase and owners were keen to benefit from growth. She said Blackstone expected to conclude more JV and partnership deals in India than in slower growth markets such as Europe.