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Large private equity (PE) funds have joined the race for a stake in telecom tower company Viom Networks. Sources said buyout PE giants Apollo, Bain Capital and Advent International were interested in getting a significant minority stake in the company.
About 45 per cent stake in Viom is held together by Srei Infrastructure and other PE investors. Viom has appointed Credit Suisse and Citi for the fund-raising. The Kanorias of SREI own 18 per cent and control management of the company, majority owned by Tata Teleservices (54 per cent) with the rest owned by IDFC Private Equity, SBI Macquarie, Oman Investment Fund and GIC of Singapore.
The sources said Viom was valued at Rs 10,000-12,000 crore. They said the Kanorias, along with other PE investors, want to exit the company.
A banker said: “This could be a large transaction and if the equity investors can get comfortable with the sector and its growth potential, it provides them an opportunity to partner in a Tata group company.” At the same time, bankers are also considering listing the company abroad, to enable an exit for PE investors.
A Viom spokesperson said, “While we don’t comment on speculation, we can re-confirm Viom Networks and its board have engaged international financial advisors to explore various options for raising growth capital. To capitalise on the next phase of telecom revolution, Viom Networks and its financial advisers will evaluate appropriate avenues to raise primary growth capital in due course of time.”
A Srei Infrastructure spokesperson said, “While we confirm that Viom is looking to raise funds for expansion and has engaged financial advisers, we cannot comment on speculation regarding stake dilution.” A spokesperson at SBI Macquarie Infrastructure Management said it had no comment on this.
Mintoo Bhandari, managing director, Apollo Global Management India Advisors, said, “We cannot comment on any potential activity or market speculation.” The spokespersons at Advent International and Bain Capital said they couldn’t comment on market rumours. At present, Viom has long-term debt of Rs 6,500 crore. It had earnings before interest, tax, depreciation and amortisation of Rs 1,900 crore in 2012-13.
According to PE advisors, the bitter experience with the recently listed PE-backed tower company has made PE investors opt for a secondary deal (sell to other PE investors or a strategic buyer). Listing abroad could provide a better valuation to the company, they said.
PE biggies — Temasek, Kohlberg Kravis Roberts, Goldman Sachs, AIF Capital and Citigroup — had made investments of $1.25 billion in 2007, by buying 14 per cent in Bharti Infratel at Rs 220 a share. However, they were unable to make a decent margin for five years later when the shares were listed at Rs 200 apiece. Bharti Infratel, listed in December 2012, closed at Rs 180.20 on the BSE exchange on Friday.
With 90,000 tenancies on over 40,000 towers spread across India, Viom Networks, is claimed to be India’s largest independent telecommunications infrastructure company. It enjoys strategic relationships with all leading telecom operators in India – Tata Teleservices, Bharti Airtel, Aircel, MTS, Vodafone, Idea, Uninor and BSNL among others.
"There are very few opportunities for funds to write a large check and this is one such - the telecom sector has faced significant pricing pressures over the last few years which impacted the tower business as well and the anticipated consolidation in the sector may help this sector as well," said head of large PE fund which is an investor in another tower company.
The talks of Anil Ambani-owned Reliance Communications (RCom) with PE majors, to sell its tower arm Reliance Infratel was also not materialised. RCom was looking for a valuation of Rs 15,000-20,000 crore for its 95 per cent stake in Reliance Infratel.
