Sovereign wealth funds, private equity funds and global infrastructure asset managers, including GIC of Singapore, ADIA, Stonepeak, DigitalBridge, KKR and Permira are among those tapped to acquire US buyout group Carlyle’s 24.04% stake in Bharti Airtel’s data centre arm, Nxtra Data Ltd (NDL), people aware of the matter said.
The Carlyle Group, among the world’s largest investment firms, is looking to sell the stake for Rs 7,000-7,500 crore, valuing Airtel’s data centre unit at Rs 24,000-29,000 crore ($3-3.5 billion, inclusive of debt), the people cited said.
Bharti Airtel owns 75.96% of Nxtra Data, a leading player in India’s data centre industry. Airtel has first right of refusal on the stake but is reckoned to have waived it, said the people cited.
“Carlyle is working with Bank of America to help monetise its investment in Nxtra,” one of them said. “A formal sale process will get launched in the coming days and non-binding bids are expected by end-March.”
The buyout group had bought the stake in Nxtra Data for Rs 1,788 crore in July 2020.
“The valuation translates to around 20-23 times the FY25 ebitda. Once closed, this could become one of Carlyle’s biggest paydays from India,” said one of the persons.
Data centres are being viewed as long-term havens for investment, leading to a private equity rush. Ten of the dozen largest deals in the past 12 months have involved private buyers, with the only exceptions being the Equinix acquisition of Entel’s data centres and Digital Realty’s purchase of a majority stake in Teraco. In the US, only six of the 20 largest colocation players are now publicly traded companies.
Carlyle, ADIA, Stonepeak and Permira declined to comment. Bharti Airtel, KKR, GIC, and DigitalBridge didn’t respond to queries.
Airtel-backed Nxtra operates 12 large and 120 edge data centres, offering its services to leading enterprise clients, hyperscalers, startups, SMEs and governments. Parent Bharti Airtel is also a key client. Nxtra plans to invest Rs 5,000 crore in new hyperscale data centre parks in key metros.
As per an August 26, 2023, CARE Ratings note, unlisted Nxtra Data’s FY23 revenue was Rs 1,601 crore. Revenue has been expanding at 13% CAGR in the last five years.
According to Airtel’s FY23 annual report, Nxtra’s net profit for the year was Rs 220.1 crore. Its non-current assets and current assets stood at Rs 2,979.2 crore and Rs 431.1 crore, respectively. Current liabilities amounted to Rs 414.1 crore. Net cash inflows from operating activities, in turn, were at Rs 641 crore in the year ended March 2023.
Data centres (DCs) are a key element of broadband communications infrastructure. Regulator Trai estimates India’s DC market will grow at an 11.4% compounded annual rate and scale the $5 billion mark by 2025 amid the country’s growing focus on digital delivery of services. A combination of rising digitisation and internet penetration in India along with the rollout of pan-India 5G networks by Bharti Airtel and Reliance Jio, the rising adoption of AI, the prominence of smart technologies, IoT-powered devices and big data is slated to further boost the data centre market.
Some of India’s biggest conglomerates have set up data centre units. In 2021, Adani Enterprises had reportedly announced a $122 million investment in a JV with global DC operator, EdgeConneX. Last year, Reliance Industries had announced an ambitious DC venture with Brookfield Infrastructure.
Source: Economic Times