Blackstone's on full blast in India

It was a particularly trying moment in the negotiations. Blackstone, the US private equity giant, was in last-minute negotiations with the promoters of the Andhra Pradesh-based Ushodaya Enterprises, owners of Eenadu and ETV, to buy a stake in their media business. Broad details had been agreed upon and documents were being prepared when the deal makers realised that the structure can be tweaked slightly.

A plain vanilla equity structure (with cash being brought in lieu of equity shares) was fine, but a higher return can be squeezed out if preference shares could be added. The question then was about the fixed dividend on the preference shares. The Blackstone team debated the issue for a long time, but it was proving to be a knotty problem. The dividend should be high enough to cover Blacktone's interest costs otherwise it wouldn't make sense.

Akhil Gupta, the chairman and managing director of Blackstone Advisors India, didn't bat an eyelid. "4.5%. It should be at least that much to cover the interest Blackstone is paying globally," he told his team. In the end, they didn't have to worry. Blackstone and Ushodaya opted for equity shares. But the incident highlighted Mr Gupta's level of preparedness and attention to detail.

He not only knew how much he needed to earn but also his firm's borrowing costs and rate at which he needed to earn to cover that. Before embarking upon the deal, Mr Gupta hired McKinsey & Co to study the media sector in India and Eenadu's place in it thoroughly.

By the time the deal got done, he had digested every bit of information that was available. "He knew what he wanted and went for it. He didn't waste time in preliminaries," a person involved in the negotiations said. In the US, Blackstone is known for its flamboyance, aggression and arrogance. It is one of the biggest private equity funds, employing some of the savviest and smartest deal makers in the world.

Recent reports that its top executives are paying lower taxes on their huge earnings triggered Congressional outrage and prompted calls for a hike in tax rates. Stephen Schwarzman, Blackstone's co-founder and private equity's enfant terrible, is even more controversial. When he is not throwing lavish $3 million parties (where guests feast on $400 crabs while listening to Rod Stewart), he is bad-mouthing the industry, threatening to kill off competition.