KKR Woos State Funds on Deal for $12 Billion Tower Firm

  • Consortium reaches out to Abu Dhabi, Norway sovereign funds
  • Brookfield also plans to weigh takeover bid for Indus Towers

A consortium led by KKR & Co. has approached sovereign funds about joining a potential deal to take over Indus Towers Ltd., which could value India’s largest wireless infrastructure company at more than $12 billion, people with knowledge of the matter said. 

KKR and Canada Pension Plan Investment Board are weighing a two-part transaction that would see them gain control of Indus Towers, according to the people, who asked not to be identified because the information is private. The investors are seeking financial partners to participate in the deal and have reached out to sovereign funds including Abu Dhabi Investment Authority and Norway’s wealth fund, the people said.

Under the plan being considered, the investor group would first boost its stake in Bharti Infratel Ltd., which owns 42 percent of Indus Towers, according to the people. After the consortium gains greater control of Bharti Infratel, it would then use the Mumbai-listed tower company to make an offer for the combined 53 percent Indus Towers stake owned by Vodafone Group Plc and Idea Cellular Ltd., the people said. 

“This tower deal will help in freeing up resources and management bandwidth for Idea Cellular and Vodafone to concentrate on their core telecommunication business,” said Rethish Varma, the Bengaluru-based head of research at Aditya Trading Solutions Ltd. “Consolidated entity will be stronger and will be able to achieve faster pace of growth.”

To read more about Vodafone India’s plan to combine with Idea, click here

The KKR consortium could face competition from Canadian alternative asset manager Brookfield Asset Management Inc., which also plans to consider an offer for a controlling stake in Indus Towers once a formal sale process begins, the people said. Deliberations are at an early stage, and the structure of the potential deal could change, the people said.

A combination with Bharti Infratel, which has a market value of $9.3 billion, would solidify Indus Towers’s position as the No. 1 owner of wireless infrastructure in India. KKR would join American Tower Corp. and Brookfield, which have spent billions of dollars on towers in one of the world’s most competitive telecommunications markets.

KKR and CPPIB bought a 10.3 percent stake in Bharti Infratel this month for 61.9 billion rupees ($954 million), according to stock exchange filings. Representatives for ADIA, Bharti Group, Brookfield, CPPIB, Indus Towers, KKR and Vodafone declined to comment. Representatives for Norges Bank Investment Management, which manages Norway’s sovereign wealth fund, and Aditya Birla Group, the parent company of Idea Cellular, also declined to comment.

Vodafone is planning to seek a buyer for its 42 percent stake in Indus Towers, while Indian operator Idea Cellular will separately offer its 11 percent stake for sale, the people said. The assets may be sold to a single buyer to get a better price, the people said. 

Bharti Infratel has a first right of refusal on Vodafone’s stake in Indus Towers, according to one of the people. It’s possible any offer the KKR consortium makes for Indus Towers could be made in the form of a share swap, the person said.

— With assistance by Mikael Holter, and Anto Antony

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