However, PE investors in Bharti Infratel have nothing to cheer when Bharti is launching one of the largest IPOs in India to raise about Rs 4,500-crore (Rs 45-billion) this month.
The largest private equity investors -- Temasek, KKR, Goldman Sachs, AIF Capital, Citigroup -- had made investments of $1.25 billion in 2007, by acquiring 14 per cent in Bharti Infratel at a price of Rs 220 apiece.
However, the fact that the price of Rs 210-240 for the shares of Bharti Infratel will never offer a decent margin for their five-year-old investment in the domestic telecom giant, has pulled the investors back from participating in the proposed IPO.
Bharti Infratel plans to raise Rs 4,500 crore (Rs 45 billion) through the IPO.
The four PE investors selling part of their stake in the IPO are Compassvale Investments, an arm of Temasek which holds 5.17 per cent, KKR Towers Company (2.59 per cent), Millenium Mauritius 1 Ltd (1.03 per cent) and AIF Capital Telecom Infrastructure (1.03 per cent).
After the issue, stake of PE investors would come down to 3.18 per cent, 2.39, 0.95 and 0.95, respectively.
Other investors selling their part stakes are GS Strategic Investments, arm of Goldman Sachs which holds 1.03 per cent, hedge fund Eton Park's Anadale Ltd (1.03 per cent) and a unit of Japan's Nomura (0.52 per cent).
"The regulatory hurdles have hit the telecom industry very much, reflected in the proposed price of Bharti Infratel shares.
"The investors who had bought shares at Rs 220 apiece five years before can wait for a price rise after an year of the IPO launch.
"Also, the 10-15 per cent price movement at the time of listing will also bring benefits for them," said an investment banker involved with the IPO.
After the IPO, Bharti Infratel will have 188 crore (Rs 1.88 billion)
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