PE investors, Srei Infrastructure to sell Viom Networks stakes

Offshore listing, sale to private equity players likely

Private equity investors, apart from Srei Infrastructure and Tata Teleservices, are expected to sell part of their stakes in telecom tower company Viom Networks, said Srei Infrastructure Vice-Chairman Sunil Kanoria.

Macquarie SBI Infrastructure, GIC Investments, IDFC Private Equity and Funderburk Mauritius hold 30 per cent stake in Viom Networks and are planning to exit the company. Tata Teleservices owns 54 per cent of Viom Networks and Srei Infrastructure the rest.

"Nothing has been finalised yet but we will have a clearer picture in a few weeks," Kanoria said from the US on Friday.

Syed Safawi, chief executive officer, Viom Networks, said the company was looking at an offshore listing. "We may decide on the route to raise capital by the end of the second quarter of 2014-15. STJ Advisors have been engaged. We are exploring an overseas listing on either the New York Stock Exchange or the London Stock Exchange," he said.

Bankers said other private equity players like Carlyle and Axiata were among those interested in buying Viom Networks. Macquarie SBI Infrastructure and Srei Infrastructure did not comment on a possible stake sale to other private equity players. Srei Infrastructure manages Viom Networks on behalf of the other investors.

It is important for Tata Teleservices to sell its stake in Viom Networks to raise funds to buy back stake from NTT Docomo of Japan in the telecom company.

NTT Docomo has said it would sell its stake in Tata Teleservices to the Tatas for not less than Rs 7,250 crore, according to a 2009 agreement.

With a deadline looming, the Tatas are interested in a quick sale of a part of their holding in Viom Networks.

Macquarie SBI Infrastructure had bought 11 per cent in Viom Networks for $304 million in 2010 and will get a good return on its exit. IDFC Private Equity is an investor in Viom Networks since 2008 and re-invested in 2009.

"Our business is doing well. To propel growth for the next three years, we need to raise capital. We have appointed Credit Suisse and Citigroup as bankers to help raise Rs 1,500 crore," Safawi said.

Viom Networks has 40,000 cellphone towers in India and earned a net profit of Rs 120 crore in 2013-14 against Rs 80 crore in 2012-13.

Safawi said the company turned around in 2012-13 and the transformation continued in 2013-14.

"Revenue stability, cost rationalisation, debt harmonisation, and a change in the business model to radically reduce capital and operating expenses are some of the reasons for the company's performance," he added.

"Our business model and agreements with telecom companies provide assured returns over the long-term. The rate of return can be higher than conventional debt instruments in developed economies. Foreign investors may be interested in generating higher returns through investment in a company such as ours," Safawi said.