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Srei seeks higher Viom valuation on Narendra Modi win

Thursday, 29 May 2014 - 6:35am IST | Place: Kolkata | Agency: dna

Revives plan stake sale and overseas listing of the telecom tower co; gauging overseas investor sentiment

With the new government in place, the Kanorias of Srei Infrastructure Finance have resumed the process of stake sale in telecom tower company Viom Networks by existing investors and an overseas listing.

They are gauging overseas investors' sentiment to find out whether the stake sale will fetch better valuation than what was earlier expected.

The Kanoria brothers, Hemant and Sunil, have started a "valuation shopping exercise" and plan to complete the process of getting feedback from prospective investors by second week of June, people in know of the development told dna.

"Initially, the process was slow as everybody was waiting what was going to happen in India and the form of the new government. But now with the new government coming in, a better valuation is expected," an official said.

The processes of identifying strategic investors as well as preparing the groundwork for documentation for an Initial Public Offer in either New York Stock Exchange or London Stock Exchange are being simultaneously pursued.

The final strategy as to which route to adopt would be taken once a clear picture of the valuation emerges by middle of next month.

While Hemant and Sunil are both travelling overseas, Srei officials clarified that neither the UK nor the US are in their itinerary.

That the Kanorias and Tata Teleservices are actively mulling overseas listing of Viom Networks, country's largest independent telecom tower provider, was first reported in dna in October.

Srei owns about 18% and controls management of Viom, which is majority owned by the Tata Teleservices having 54% stake. The rest is with institutions including IDFC Private Equity, SBI Macquarie, Oman Investment Fund and GIC of Singapore.

Srei's exposure in Viom stands at Rs 1,598 crore as on March-end.

Having turned around in fiscal 2013, Viom earned a cash profit of Rs 929 crore in fiscal 2014on a revenue base of Rs 4,629 crore, and a healthy operating-profit margin of 54%. It has about 41,690 towers with a tenancy ratio of 2.2, claimed to be the highest in telecom infrastructure industry.

Its key tenants, apart from Tata Teleservices, are Aircel, MTS and Telenor, having contract periods ranging between 10 and 20 years.

The Tatas as a client are locked in for a period of about 15 years while it is 7 years for others. With this, revenue of about Rs 18,600 crore have already been locked in.

These, and features like lucrative incremental margins of 50-70% due to efficiency and lower capex are the being positioned before the prospective investors.

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