Wilbur Ross Tries India

He now owns textile and auto parts plants worldwide—and has $300 million to spend in India

by Nanette Byrnes and Nandini Lakshman

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Ross' Mumbai team is scouting for distressed assets in a range of industries Ethan Hill

India has been a slog for Wilbur L. Ross Jr. The New York investor, who likes to buy downtrodden assets and then cut away every inch of fat to rehabilitate them, opened an office in Mumbai two years ago to hunt for deals. But with the country's economy expanding fast and the Bombay Stock Exchange soaring, few were interested in selling at the kinds of prices Ross was willing to pay. "We were bidding, but losing, losing, losing," Ross says, while rivals "were paying very big prices."

Now, with its stock market in reverse and merger activity slowing, India may finally be ready for Ross. On Aug. 11 he took an $80 million stake in SpiceJet, an Indian discount airline. And he has a $300 million fund ready for other deals in the country. From a spartan office in Mumbai—a bouquet of dyed turquoise orchids on the reception desk is the only aesthetic touch—Ross' team is exploring investments in sugar, cement, real estate, and more. "Our mandate is to look at any situation where . . . there is some degree of distress and there's potential for consolidation," says Ranjeet Nabha, CEO of Ross' India operations.

It's part of Ross' global strategy. He made his fortune stitching together the remnants of troubled U.S. industries such as steel, coal, and textiles. His playbook involved gobbling up assets on the cheap and combining them into a lower-cost operator that he later could sell off at a hefty profit. His most famous deal: the 2004 sale of his steel business to Lakshmi N. Mittal for $4.5 billion, at a profit of more than $2 billion in just two years. His philosophy hasn't changed, but his stomping ground has gotten a whole lot bigger. Today, two-thirds of WL Ross & Co.'s earnings come from outside the U.S.

So far, Ross seems to be making his way as a citizen of the wider business world. Investments in developing countries have fared well, he says. Returns nearly equal those earned on more established terrain, about 30% per year, according to sources close to the firm. Ross has already made investments in more than 20 countries—including Vietnam, China, Brazil, Mexico, and South Africa—and he now manages close to $8 billion on behalf of U.S. state pension funds like CalPERS, sovereign wealth funds, and Britain's university pension fund, among others.

To date, Ross has followed two fundamental strategies internationally. At first he picked up far-flung factories of troubled industries he knew. Ross initially assembled his auto components business from U.S. and European divisions of Collins & Aikman and Lear (LEA), but today the group operates in 17 countries. His second play has been to mimic the moves of any cost-conscious U.S. or European manufacturer shifting work to low-wage countries. His textile group (ITXN), for example, has built factories in China and is in a joint venture in Vietnam, and the auto parts operation has 75 plants around the world.

With SpiceJet, Ross is further tweaking the model with an eye toward consolidating an industry that is almost entirely domestic. India's vast size and lousy roads will keep air traffic growing two to three times as fast as the broader economy, he calculates, and the country's low incomes should put discounters such as SpiceJet in a strong position. The big payoff, he says, will come when he can merge SpiceJet with other struggling airlines. "There are about a half-dozen of these low-cost carriers in India, all losing money," says Ross. "There's room for maybe two." He says he has talked with SpiceJet rivals, though he won't say which ones.

By the time Ross got involved in SpiceJet this summer, the airline had racked up $20 million in unpaid airport fees and plane leases. High fuel prices combined with an industrywide fare war left SpiceJet in need of fast cash. Management was making short-term moves just to raise money, including an offer of half off any ticket purchased 15 days in advance.