Reliance Info Valued At Rs 60,000 Crore

[Greens 21]

six major private equity players seen in race for 10 per cent stake

Reliance Info Valued At Rs 60,000 Crore

SOURAV MAJUMDAR

Mumbai, April 7 The valuation of Reliance Infocomm, the telecom and convergence major of the Reliance group, has been pegged at about Rs 60,000 crore (roughly around $13 billion), even as six major private equity investors are understood to be in the race for a 10 per cent stake in the company.

Independent valuations by PricewaterhouseCoopers and Ernst & Young — appointed by the company — are believed to have pegged the figure at around this level. The valuations came in around January this year.

Investment banking sources said among the names which were in the race for the 10 per cent stake included Capital International, Government of Singapore, Janus, Carlyle, Deutsche Private Equity and Citigroup Private Equity. There’s also talk of the Singapore government partnering Tamasek Holdings in this.

Investment banks are also working on due diligence for these entities. Among the banks being mentioned in this context are Deutsche Bank, JM Morgan Stanley and Enam.

When contacted on the issue, a Reliance Infocomm spokesperson told FE: “We do not comment on speculation.”

The Rs 60,000 crore valuation level is much higher than the earlier value which came up when talks were on with Qualcomm for a four per cent stake sale. At that point, the four per cent was valued at $200 million, providing a valuation of $5 billion for the entire enterprise.

However, at that point, Reliance Info had not rolled out its services. That deal subsequently fell through. The current valuation includes the mobile telephony business and the major broadband rollout which the company has lined up.

If Rs 60,000 crore is taken as the value of the enterprise, then the 10 per cent stake works out to Rs 6,000 crore. Reliance Industries Ltd, the group flagship, has a 45 per cent stake in Reliance Infocomm, and the rest is owned by the Ambani family. If the stake is sold at Rs 6,000 crore, the company will then be debt-free, since it currently has Rs 5,000 crore of debt. The stakes of RIL and the Ambani family will come down pro-rata after the issue of fresh shares during the stake sale.

Reliance Info has 7.5 million subscribers, taking the post-paid and pre-paid subscribers together. The company expects to hit the 10 million subscriber mark by September, and 15 million by March 2005.

The company achieved a break-even in September 2003, and ended fiscal 2004 with a small net profit.

Reliance Industries has a current market capitalisation of about Rs 80,100 crore.

URL: http://www.financialexpress.com/fe_full_st...ontent_id=56541