Providence Equity eyes 25% in Idea
Private equity firm Providence Equity Partners is close to picking up a stake in AV Birla-owned Idea Cellular. According to sources, Providence is likely to buy 25% share in the Pune-based telecom company. The deal size is pegged between Rs 3,500 crore and Rs 4,000 crore valuing Idea at close to Rs 15,000 crore, sources said.
Citigroup Venture Capital is also believed to be nearing a deal with Idea. However, when contacted by ET, Idea director Sanjeev Aga refused to comment. “I won’t comment. Whenever a deal is done, we will make the announcement,” he said on phone from London.
The Birla group had earlier said they will place the shares with financial investors at the same price at which they acquired them from Tatas (Rs 40.50). The company is likely to make a formal announcement soon, said sources.
Idea Cellular was originally a JV between the Tatas and the Birlas, before the latter bought out the Tatas’ 48.14% stake for Rs 4,406 crore. Going by the valuation of the Tatas’ stake at Rs 4,406 crore, the total value of the company will be Rs 9,152 crore.
Analysts, however, estimate the valuation to be in the range of Rs 15,000 crore to Rs 18,000 crore.
As per a document submitted by the company to DoT, Idea has a net worth of Rs 1,042.92 crore. While the AV Birla group is considering an IPO early next year, it was open to a pre-IPO placement to gain from the current interest in the telecom sector.
Earlier, group chairman Kumar Mangalam Birla had said, “We are talking to other PE groups including Providence for selling the (Aditya Birla) Nuvo stake, as the due-diligence is on, it’ll take some time.”
The Birlas own 98.3% in Idea, with Aditya Birla Nuvo holding 35.7%, Birla TMT Holdings 44.9%, Grasim 7.5%, and Hindalco 10.1%. However, officials indicated that the group is exploring options of an IPO where 20% of the Birlas’ equity can be sold. The move comes on the back of a revival in the capital market and strong prospects for the telecom sector.
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