RELIANCE INFO TO
PLACE U.S. $ 1 BILLION WITH PRIVATE EQUITY INVESTORS
Reliance Infocomm is close to placing
an estimated $1bn worth of equity with three foreign investors
-- Capital International, Government of Singapore Investment
Corporation and Nomura -- according to market sources. However,
sources close to Reliance denied the news, saying any deal
was at least a month or two away.
Reliance Info has recently entered into
negotiations with foreign equity investors like Government
of Singapore, Temasek, Citigroup Private Equity and several
others. Microsoft, too, is said to have shown an interest
in investing in Reliance Info. According to sources, only
the first round of negotiations with potential investors have
taken place so far. "We are looking at investors only,
not partners," said a source.
According to market information, Reliance
Info is looking to place around 10% equity. The company is
said to be hoping to raise around Rs 5,000 crore through this
route, which works out to a valuation of around Rs 60,000
crore, said industry observers. This equity is being raised
to fund Phase II of its project, which will increase the coverage
for its cellular services to about 5,000 towns across the
country. The company currently covers 1,100 towns in the country.
In the wireline segment, it is entering the enterprise broadband
segment in a big way.
The company is looking at raising a mix
of equity and debt. The debt is likely to be either in the
form of external commercial borrowing (ECB) or domestic debt.
For equity, the company is considering investments by private
equity players, FIIs, telcos and other strategic players.
Reliance Info's plans of an IPO have been put on hold for
now since the company is looking at alternative sources of
raising equity. "The IPO will be within a year's time,''
said a source. The company had completed financial closure
for Phase I of the project in October '03 when it tied up
debt of Rs 5,000 crore with a clutch of institutions and banks.
The debt : equity ratio is around 1:2, with the equity being
brought in by Reliance Industries (45%), the family (45%)
and Trusts holding about 10%.
The Reliance logic is they are not just
in the voice game. "In the long term, only about 25%
of our revenues will be from telecom," said a source.
The majority of our revenues will come from data, data centres,
worldwide connectivity (through Flag) and areas like the WebWorlds,''
said a source. Reliance is the largest data centre operator
in the country today.
