INDIA BUSINESS WORLD SEPTEMBER (16th - 30th) 2007
The Month that was ...
PRIVATE EQUITY FUNDS PICK UP STAKE IN HYDERABAD BASED ASTER TOWER FOR $35M
US-based private equity fund, New York Life Investment, a wholly-owned subsidiary of global insurance major New York Life Insurance Co, along with Jacob Ballas Capital, an India-focussed private equity fund, is learnt to have picked up equity stake in Hyderabad-based Aster Tower, an Aster Telecom group copmany, for $35 million. Aster's telecom business is divided into two different companies - Aster Tower and Aster Infrastructure. When contacted, executives at Aster refused to confirm the development.
This investment has come out of the $400 million-New York Life Investment India Fund III, along with Jacob Ballas Capital. New York Life Investment has already committed to putting close to $100 million in the new fund, with other participants being family offices, large institutions and high networth individuals. When contacted Jacob Ballas Capital chairman Rajan Jetley, confirmed the deal but refused to give details of equity holding in the company. Mr Jetley said the focus of the fund will be on infrastructure-related companies. Among others, Jacob Ballas Capital has investments in Bharti Airtel.
This is the second major investment in Aster over the last couple of weeks. Last month, NRS PE Mauritius - the private equity fund promoted by former DSP Merill Lynch investment banker Amit Chandra and former global chief of McKinsey Rajat Gupta had closed a deal to acquire about 73% stake in Aster Infrastructure Rs 232.58 crore.
PE firms are tracking telecom infrastructure companies because of their potential. Put simply, to maintain the current growth trends in telecom, India needs to build two times the cellular infrastructure it has created over the last decade, in the next 36 months. With infrastructure creation being the primary driving force that will sustain growth in the world's fastest growing cellular market, standalone tower companies have unlimited opportunities over a considerable future period of time. So, there's hectic activity in this sector.
For instance, Texas-based fund Q Investment invested $500 million in tower company Xcel Telecom set up in October 2006. Recently, Reliance Communications offloaded 5% stake in its tower arm - Reliance Telecom Infrastructure - to US-based investor George Soros along with six other players which include Fortress Capital, Galleon, GLG Capital, HSBC, DA Capital and New Silk Route, for Rs 1,400 crore. Tata Teleservices, too, has shortlisted nine players to sell or lease out its roughly 6,000 telecom towers across India. Acme Telepower has also been on the radar of several PE funds.
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