People walk to Brookfield Place off Bay Street on the day of the annual general meeting for Brookfield Asset Management shareholders in Toronto.© Mark Blinch / Reuters
Brookfield Asset Management Inc. has entered exclusive talks on a takeover of Bharti Infratel Ltd., India's largest listed wireless tower owner, after submitting a bid valuing the company at about $11-billion, people with knowledge of the matter said.
Canada's largest alternative asset manager offered to buy a majority stake in Bharti Infratel for around 400 rupees per share, the people said, asking not to be identified because the information is private. An investor group including KKR & Co., Canada Pension Plan Investment Board and Blackstone Group LP made an offer for a minority stake in the Gurgaon-based company, which is controlled by billionaire Sunil Mittal, according to the people.
The bid from the KKR consortium was above the recent market price, though less than Brookfield's offer, one of the people said. Shares of Bharti Infratel rose 3 per cent at the close in Mumbai on Thursday, after earlier jumping as much as 5.2 per cent.
No final agreements have been reached, and there's no certainty the discussions will result in a transaction, according to the people. Bharti Infratel shares had fallen 12 per cent from the start of the year through Wednesday, giving the company a market value of about $10.1-billion.
A sale would help parent company Bharti Airtel Ltd. pay down net debt that totaled 814.8 billion rupees ($11.9-billion) at the end of September. Bharti Airtel said last month it formed a panel to evaluate options for monetizing its 72 per cent stake in the tower company. Bharti Airtel hasn't made a final decision on how large a shareholding it's willing to sell in the business, one of the people said.
"The asset is a very large one in the telecom space – there are very few such assets with such scale on the block," Vivekanand Subbaraman, an analyst at Ambit Capital Pvt in Mumbai, said by phone Thursday. "For companies like Brookfield, the question will be on the magnitude of stake, whether there will be a control premium."
Biggest Deal
Carlyle Group LP was also considering a bid for a stake in Bharti Infratel, another person said. Representatives for Blackstone, Brookfield, Carlyle, CPPIB and KKR declined to comment. A spokesman for Bharti Airtel and Bharti Infratel declined to comment beyond earlier statements. Mint reported Wednesday, citing unidentified people, that Brookfield had started exclusive talks, without specifying the level of the bid.
A takeover of Bharti Infratel would be Brookfield's biggest investment in India, according to data compiled by Bloomberg. The Canadian firm agreed in October to buy Reliance Communications Ltd.'s mobile-phone tower business for an upfront payment of 110 billion rupees, in what would be the largest deal by a private equity fund in the country, the data show.
Brookfield is seeking additional investments in Indian infrastructure, including telecom towers, Anuj Ranjan, the firm's regional head for the Middle East and South Asia, said in an interview last month. It also agreed in October to buy about $1-billion of commercial property from Hiranandani Developers Pvt, according to Ranjan.
Bharti Infratel has 89,791 towers at the end of September, according to a company presentation. It also owns 42 per cent in Indus Towers Ltd., a joint venture with Vodafone Group Plc and Idea Cellular Ltd. that is India's largest owner of wireless telecommunications infrastructure.