PE investors okay RCom tower deal

The deal by Anil Ambani-owned Reliance Communications to sell its tower assets to Canada's Brookfield Infrastructure is set for quick closure as private equity (PE) investors and hedge fund managers have given their approval to the transaction.
 
The Rs 11,000-crore deal, which was announced in December, has received almost all approvals. According to sources, PE investors, including NSR Partners, HSBC Daisy Investments (Mauritius), George Soros Quantum Funds, Galleon & Drawbridge Towers, and hedge fund managers have given their approvals to Reliance Communications for the deal. The approvals pave the way for quick closure of the tower deal.
 
PE investors and hedge fund managers hold a 4.26 per cent stake in Reliance Communications' tower arm Reliance Infratel. The tower arm stake sale will bring down Reliance Communications’ debt by Rs 11,000 crore. When contacted, Reliance Communications declined to comment on the development.
 
The deal has received approvals from the Competition Commission of India, the Securities and Exchange Board of India, the National Stock Exchange, the Bombay Stock Exchange and shareholders. The only approvals left, a source said, were those from the National Company Law Tribunal, which would likely be taken up on June 28, and lenders, for which the formal consent process would begin in the last week of June.
 
The Union Cabinet is also likely to take up the deal in the next couple of weeks.
 
According to the deal, Brookfield will pay Reliance Communications Rs 11,000 crore in cash upfront for a 51 per cent interest in the tower business. Reliance Communications will retain a 49 per cent stake that could be monetised later. This will be the largest FDI deal in the infrastructure sector.
 
The combination of Reliance Communications’ wireless business with Aircel is signed and announced. It will reduce Reliance Communications’ debt by another Rs 14,000 crore.
 

 
To further reduce its Rs 45,000 crore debt, Reliance Communications plans to sell real estate to raise another Rs 10,000 crore. After all these transactions, the company’s debt is likely to be Rs 10,000 crore.
 
Reliance Communications has sought expressions of interest for the Reliance Centre in Delhi and the DAKC property in Navi Mumbai.
 
The Reliance Centre, on 4 acres, is valued at Rs 700-800 crore. The company expects the ready-to-move-in property will draw interest from corporate groups and banks. The Mumbai property is spread over 133 acres and is valued at Rs 8,000-10,000 crore.
 
Sources said the sale of the two properties was likely to be completed by the end of 2017. The proceeds from these two transactions will be used to retire debt.