Small BusinessR-Infratel plans pre-IPO sale to raise Rs 2,500 cr
RCom’s tower arm to dilute 4-5% in pre-IPO placement.
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Reliance Infratel, a subsidiary of the Anil Ambani-led Reliance Communications (RCom), plans to raise Rs 2,500 crore from a pre-IPO placement that will dilute its stake by 4-5 per cent. JM Financial, the lead banker in R-Infratel’s initial public offering (IPO), today initiated talks with investors to find a buyer before the IPO opens, according to banking sources close to the deal.
“The company is looking to raise Rs 5,000 crore from the sale of a 10 per cent stake in the primary market. If the company manages to raise Rs 2,500 crore from the pre-IPO placement, it will infuse confidence in investors for the duration of the IPO,” a Mumbai-based banker said.
The co-lead managers of the IPO are JPMorgan, Enam Securities, Deutsche Bank, ICICI Securities and HSBC. A company spokesperson declined to comment on the pre-IPO placement, citing Securities and Exchange Board of India (Sebi) guidelines.
In 2007, RCom had sold a 5 per cent stake in R-Infratel for Rs 1,400 crore to seven financial investors — George Soros, HSBC, Fortress Capital, New Silk, Galleon, DA Capital and GLG Capital. The deal valued the company at Rs 28,000 crore. Recently, it said the proceeds of the 156-million-share IPO would be used to cut debt and aid expansion, joint ventures and acquisitions.
After the proposed offerings in R-Infratel, the stake of RCom in the tower arm will reduce to 80 per cent. Billionaire Anil Ambani-led promoters have a 67.22 per cent stake in RCom. The company values the tower arm at Rs 50,000 crore, taking into consideration the fund-raising plans through the offerings.
Last week, market regulator Sebi cleared R-Infratel’s draft red herring prospectus for its proposed IPO. RCom first unveiled plans for the IPO in February 2008, but these were swiftly shelved in response to the global economic slowdown. Last year in September, the company revealed it was preparing a new prospectus for Sebi.
R-Infratel has 50,000 towers and an optic backhaul infrastructure across 25,000 towns and 600,000 Indian villages.
The consolidation spree in the tower space started in 2007 when Bharti Airtel, Vodafone-Essar and Idea Cellular spun off their tower businesses to form an independent company — Indus Towers — that has over 100,000 towers at present.
Recently, GTL Infrastructure announced the acquisition of Aircel’s 17,500 telecom towers for Rs 8,400 crore.