VCCircle

Updated: Sequoia Capital India has picked up 1.5 per cent stake in Idea Cellular for $42 million. That's at an enterprise valuation of $2.8 billion, similar to the other recent private equity deals in Idea Cellular.

It's better late than never for Sequoia Capital India. The Bangalore-based venture capital-cum-buyout firm has picked up a small stake (about 1.5 per cent) in the IPO-bound Idea Cellular for around $48 million. The Economic Times reports that the deal has happened at a higher price than what a few private equity funds like Chryscapital and Providence Equity Partners paid for their stake in Idea last month.

ChrysCap and others have reportedly picked up Idea shares at around Rs 50-53. Since Sequoia has entered at the pre-IPO round which means their acquisition price will be equivalent to the IPO price. I heard some anlysts on CNCB TV18 channel saying that Idea may fix the IPO price band around Rs 60.

US-based Providence Equity Partners has picked up 15 per cent in Idea Cellular for about $400 million, while UK-based hedge fund group GLG Partners has picked up 8 per cent equity for about $213 million. TA Associates of the UK has also bought a small stake for an undisclosed amount, while Citigroup and ChrysCapital also have entered the company with some 4-5 per cent each.

Idea Cellular has filed a draft red herring prospectus with SEBI to raise about Rs 2,500 crore through its IPO. The company plans to dilute 15 per cent through a pre-IPO placement, and Sequoia's deal seems to be part of it. Idea has appointed Citigroup Global and UBS Securities as senior co-book running lead managers, while JM Morgan Stanley and DSP Merrill Lynch will be the lead managers for the IPO.

Sequoia has been increasingly doing private equity deals. It recently bought out 9 per cent stake in Flextronics Software alongwith the buyout fund KKR. Sequoia has raised a third fund of $400 million for buyout activities.

The investment in Idea Cellular is definitely a good "idea" since telecom companies are expected to do well in India, the fastest growing mobile market in the world. There are only two listed companies in the space - Bharti Airtel and Reliance Communications and both are hot stocks in Dalal Street.

Related:

ChrysCapital Invests $122 Million In Idea Cellular; Providence Puts In $400 Million

GLG Partners Pick Up 8% In Idea Cellular For $213 Million: Report

Four Funds Pick Up 25% In Idea Cellular

Idea Cellular Files Draft IPO Prospectus; The Issue To Raise Rs 2,500 Crore