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 ( Rs 100 -120 billion). 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 ( Rs 650 billion). It had earnings before interest, tax, depreciation and amortisation of Rs 1,900 crore ( Rs 190 billion) 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.