Srei eyes $500-mn deal for telecom towers in Russia

Kolkata-based Srei Infrastructure is looking for "strategic partners" among Russian companies to bid for VimpleCom's telecom towers for around $500 million. The bid will be one of the biggest investments by an Indian company in an overseas asset in recent times.

VimpelCom is selling 10,000-12,000 towers in Russia with at least three groups making a bid.

When contacted, a top Srei official also said Quippo also wants to be an advisor to other Russian companies for the sale. Quippo, a subsidiary of Srei, operates in equipment rental business for construction, oil and gas, and energy sectors.

"We have acquired some knowledge about the telecom tower industry with Viom Networks and we are using this in VimpelCom sale," said a Srei executive on Wednesday.

In January, the Kanorias had said they are looking for opportunities in telecom tower space in other geographies including Russia but did not share more details.

"We have built expertise in the tower business, and we see there are good opportunities in other countries… Our tower business will be a completely independent venture under Quippo," Sunil Kanoria, vice-chairman, Srei Infrastructure Finance said on January 27.

Other bidders for VimpelCom assets are Vertikal - a consortium of Russian Towers and Goldman Sachs - and a consortium of Baring Vostok Capital and Mubadala - Russian Direct Investment Fund. Japan's Mitsui is also keen to join one of the consortiums.

Srei had received cash in October last year when American Tower Corporation (ATC), a New York Stock Exchange-listed mobile infrastructure company, acquired 51 per cent stake in Viom Networks for Rs 7,635 crore from Srei and Tatas. While Kanorias sold their entire 18.5 per cent stake in Viom to ATC for Rs 2,952 crore, Tata Teleservices sold 19 per cent stake, retaining 35 per cent shares in Viom Networks.

As per 'no-competition clause' in the agreement with ATC, Kanorias cannot enter telecom tower business in India. Srei Group had received Rs 600 crore over and above the deal price for agreeing to not enter tower business in India.

In December 2015, Srei announced that BNP Paribas Lease Group, a 100 per cent subsidiary of BNP Paribas Group, has decided to sell its entire 50 per cent stake in Srei Equipment Finance Limited (SEFL) to Srei Infrastructure Finance. In exchange, BNP Paribas acquired five per cent in Srei Infrastructure Finance, which will now be the parent company of SEFL.

The exit from Viom was Srei's first step towards a change in its investment portfolio.

As on September 2015, the company's strategic investment pool was of about Rs 1,969 crore, which included investments in telecom, communication, transportation, rural IT and energy, according to a presentation made by Srei to analysts.

The VimpelCom sale transaction is arranged by Merrill Lynch.

INTEREST IN THE BIZ

| VimpelCom is selling 10,000-12,000 towers in Russia with at least three groups making bids
| A top Srei official also said Quippo also wants to be an advisor to other Russian companies for the sale
| Other bidders for VimpelCom assets are Vertikal - a consortium of Russian Towers and Goldman Sachs - and a consortium of Baring Vostok Capital and Mubadala - Russian Direct Investment Fund
| Japan's Mitsui is also keen to join one of the consortiums