Thursday, October 27, 2005

Reliance Info contemplating $1 bn pre-IPO private placement

Cellular major Reliance Infocomm, part of the Anil Dhirubhai Ambani Enterprises, ADAE, Group, is believed to be contemplating a USD 1 billion pre-IPO private placement, according to banking and industry sources, reports The Economic Times.
The ADAE Group is looking to sell around 10% of Infocomm’s equity, which would value the company at around USD 10 billion, or just under Rs 44,000 crore (Rs 440 billion), if the company does manage to obtain such a valuation in the market.
Private equity majors active in India such as Newbridge and Blackstone are believed to have been approached by the ADAE Group, sources said. When contacted, a senior ADAE Group official strongly denied that any such private placement was in the offing. “Nothing of the kind is being planned,” the official said.
However, officials at a large private equity fund confirmed that preliminary discussions had been held with the ADAE Group. Sources familiar with the situation said the ADAE Group has so far informally sounded out some potential investors.
A formal mandate may be issued later depending on the response, sources said.
Sources said private equity investors may want some say in the functioning of Reliance Infocomm for such a major investment. That may be a sticking point as the ADAE Group may not part with much of management control.
Inducting a major investor would help increase the valuation of Reliance Infocomm, which is widely expected to go in for a public issue some time next year.
Reliance Infocomm had a valuation of around Rs 22,500 crore (Rs 225 billion), going by the Rs 32 per share at which RIL converted its preference shares in Reliance Infocomm, as part of the settlement between Reliance Industries Chairman Mukesh Ambani and his brother, Anil, Chairman of the newly-formed ADAE Group.
Bharti Tele-Ventures, India’s most valuable telecom company, had a market capitalisation of Rs 62,203 crore (Rs 622.03 billion) at Wednesday’s closing prices.
Reliance Infocomm posted a net profit of Rs 51 crore (Rs 510 million) on a turnover of Rs 5,387 crore (Rs 53.87 billion) in ‘04-05. The previous year, ‘03-04, it had a loss of Rs 170 crore (Rs 1.70 billion) on a turnover of Rs 2,707 crore (Rs 27.07 billion).
Reliance Infocomm had held discussions with potential private equity investors late last year, when it was controlled by Mukesh Ambani. Those discussions were put on hold when the dispute between the Ambani brothers became public. They had been revived in the past few weeks, sources said


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