20-03-2012, 06:22 PM
Business Times - 20 Mar 2012
Reliance unit files for S'pore IPO: sources
(NEW DELHI) The undersea cable unit of India's Reliance Communications has applied to list in Singapore, two sources with direct knowledge of the matter said, potentially raising US$1-1.5 billion to help its parent pare a heavy debt burden.
The unit will list as a business trust and has been keen to raise up to US$1.5 billion in what is set to be Singapore's biggest IPO of the year but sources involved in the process have said US$1 billion is a more realistic target.
A successful offering would be a major relief for beleaguered Reliance Communications which has seen its fair share of failed deals. India's No 2 mobile operator, controlled by billionaire Anil Ambani, is struggling with US$6.9 billion of debt and has posted 10 straight quarters of profit decline amid fierce competition.
Manish Sonthalia, a Mum- bai-based fund manager at Motilal Oswal AMC, said US$1.5 billion was not out of reach but it would depend on market conditions, while other analysts noted that there was a lot of inherent value in cable assets as data demand surges worldwide.
'This one could be good if they can get the right valuation and demand,' said Nomura analyst Sachin Gupta. 'The appetite towards Indian telcos is relatively low but the cable business should have more utility-type characteristics, provided customer and cashflow is sticky.'
The IPO is likely to be launched in the second quarter of 2012, said the sources, asking not to be identified. Sources have said previously that Reliance Communications plans to sell 75 per cent of the wholly owned unit in the offer.
By listing in Singapore, the unit can take advantage of some of the most attractive rules for listing a business trust. Business trusts contain assets that pay regular dividends, most of which are distributed to shareholders.
Successful deals have been few and far between for Reliance Communications. A hoped-for IPO of its telecoms tower unit failed to take off and a planned sale of the business has dragged on for nearly two years, forcing the mobile operator to tap Chinese loans again to repay about US$1.2 billion in overseas convertible bonds that were due for redemption this month.
'(Reliance Communications') problem is over-leverage and mainly emanates from not being able to monetise their tower business. But the group is in need of raising cash, and whichever asset is getting monetised, it is good for the company,' said Mr Sonthalia.
The unit, which has hired Standard Chartered, DBS and Deutsche Bank as its main advisers for the offer, applied for the listing last week and is waiting for the Singapore Stock Exchange's approval before it makes the plans public, the sources said\. \-- Reuters
Reliance unit files for S'pore IPO: sources
(NEW DELHI) The undersea cable unit of India's Reliance Communications has applied to list in Singapore, two sources with direct knowledge of the matter said, potentially raising US$1-1.5 billion to help its parent pare a heavy debt burden.
The unit will list as a business trust and has been keen to raise up to US$1.5 billion in what is set to be Singapore's biggest IPO of the year but sources involved in the process have said US$1 billion is a more realistic target.
A successful offering would be a major relief for beleaguered Reliance Communications which has seen its fair share of failed deals. India's No 2 mobile operator, controlled by billionaire Anil Ambani, is struggling with US$6.9 billion of debt and has posted 10 straight quarters of profit decline amid fierce competition.
Manish Sonthalia, a Mum- bai-based fund manager at Motilal Oswal AMC, said US$1.5 billion was not out of reach but it would depend on market conditions, while other analysts noted that there was a lot of inherent value in cable assets as data demand surges worldwide.
'This one could be good if they can get the right valuation and demand,' said Nomura analyst Sachin Gupta. 'The appetite towards Indian telcos is relatively low but the cable business should have more utility-type characteristics, provided customer and cashflow is sticky.'
The IPO is likely to be launched in the second quarter of 2012, said the sources, asking not to be identified. Sources have said previously that Reliance Communications plans to sell 75 per cent of the wholly owned unit in the offer.
By listing in Singapore, the unit can take advantage of some of the most attractive rules for listing a business trust. Business trusts contain assets that pay regular dividends, most of which are distributed to shareholders.
Successful deals have been few and far between for Reliance Communications. A hoped-for IPO of its telecoms tower unit failed to take off and a planned sale of the business has dragged on for nearly two years, forcing the mobile operator to tap Chinese loans again to repay about US$1.2 billion in overseas convertible bonds that were due for redemption this month.
'(Reliance Communications') problem is over-leverage and mainly emanates from not being able to monetise their tower business. But the group is in need of raising cash, and whichever asset is getting monetised, it is good for the company,' said Mr Sonthalia.
The unit, which has hired Standard Chartered, DBS and Deutsche Bank as its main advisers for the offer, applied for the listing last week and is waiting for the Singapore Stock Exchange's approval before it makes the plans public, the sources said\. \-- Reuters
if so good won't need to ipo already.