INDIA BUSINESS WORLD - OCTOBER 2006
THE MONTH THAT WAS...

CHRYSCAPITAL PUTS RS 550 CR FOR 5% IN IDEA

 PRIVATE equity (PE) major ChrysCapital has reportedly invested around Rs 500-550 crore in Idea Cellular. With Idea Cellular's valuation pegged at around Rs 10,000-12,000 crore, ChrysCapital's stake is expected to be around 4-5%.

   The Aditya Birla Group company is India's fifth-largest wireless telecom operator with a subscriber base of 10.4 million. Earlier this year, the group bought out Tatas' 48% stake for Rs 4,406 crore. Since then, market buzz had it that Idea has been eyeing funds from investors.

   According to investment banking sources, the Idea investment is ChrysCapital's single-largest fund infusion, overtaking its Rs 370 crore in UTI Bank a few months ago. Both transactions point to ChrysCap adopting a more aggressive investment strategy and enhancing its deal size. This is also ChrysCapital's first investment in the mobile services space. Besides UTI Bank, its investment portfolio includes Suzlon, Yes Bank, Moser Baer, ING Vysya Bank, and Intas.

   Industry sources say the deal was stitched quickly after talks between the PE major and telecom company began a few days ago. When contacted, ChrysCapital officials declined comment. It has been reported earlier that ChrysCap's peer Providence Partners bought a 16% stake in Idea for Rs 1,850 crore.

 Idea Cellular has a unique place in India's corporate history as it was a joint venture between two of India's oldest business houses — the Tatas and Birlas. However, earlier this year, the Tatas quit the company to focus on their CDMA venture — Tata Tele Services, leaving the Birlas with 98% in the company. Idea has a debt burden of $1 billion and needs fresh investments to not only reduce the debt-equity ratio, but also expand in an intensely competitive marketplace.

   Idea is present in eight circles, including Andhra Pradesh, Delhi and NCR, Gujarat, Haryana, Kerala, Madhya Pradesh & Chhattisgarh, Maharashtra & Goa, and UP (W).