PE firms in talks to buy 80% in Reliance Globalcom

A consortium led by Samena Capital could seal the deal for $1-1.2 bn

A consortium of private equity (PE) firms led by Samena Capital is in talks to pick a majority stake in Reliance Globalcom, the owner of undersea cable firm FLAG Telecom. The deal to this effect is expected to be sealed by the end of May.

The other PE players in the consortium are the US-based Providence Equity Partners and Carlyle. According to sources, the consortium could buy about 80 per cent in Reliance Globalcom in a deal estimated at $1-1.2 billion. The stake sale is part of the restructuring exercise being undertaken by the Anil Ambani-promoted Reliance Communications (RCom) to bring down about Rs 35,000-crore debt.

“Samena Capital, in a proposed consortium with certain other global PE funds, is at an advanced stage of the due diligence process and completion of definitive documents in relation to the acquisition of Reliance Globalcom, our global communications services business unit,” RCom today informed the stock exchanges. (RELIANCE GLOBALCOM’S OPERATIONS)

Reliance Globalcom was previously in talks with Bahrain Telecom (Batelco). “RCom and Samena are no longer in discussion with Batelco for the purposes of the transaction,” RCom statement to exchanges said.

“At this point, there can be no certainty this will lead to a transaction. A further announcement will be made in due course, if and when appropriate,” it added.

Samena, which started investing in India in 2009 and manages capital commitments of more than $700 million across a range of close-ended fund structures, has invested in Eicher Motors, Voltamp Transformers, Ballarpur Industries, Dynamatic Technologies, Jubilant Energy, Jubilant Organosys and HBL Power Systems.

Carlyle, which manages about $175 billion globally, had started investing in India more than a decade ago. It has so far invested in 11 companies and earned returns of three-six times. These include $650-million minority investment in HDFC Bank that has offered it a return of six times in five years.

Providence Equity Partners has funds of $28 billion under management. It has invested in Idea Cellular, UFO Moviez India, Hathway and ABTL (which holds a stake in Indus Towers).

In 2012, RCom-controlled FLAG Telecom had planned an initial public offering to raise about $1.25-1.5 billion, divesting about 75 per cent equity. The listing was planned in Singapore Stock Exchange. But, RCom later decided to call off the IPO.