GIC joins as co-investor in India’s biggest PE deal
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Singaporean sovereign wealth fund GIC Pte Ltd said Tuesday it has teamed up with Canada’s Brookfield Asset Management Inc. and others in a $3.4-billion deal (Rs 25,215 crore) to buy the telecom tower assets of conglomerate Reliance Industries Ltd (RIL).

The deal, which has now closed, is the biggest private equity transaction in India. In December last year, VCCircle had reported that Brookfield had managed to bring two co-investors on board for the deal: British Columbia Investment Management Corp, which is a Canadian pension fund manager; and GIC.  

RIL said in a statement the deal marked the biggest foreign investment in an Indian infrastructure vehicle.

In another statement, Ang Eng Seng, chief investment officer of infrastructure at GIC, said, “The portfolio offers resilient income and long-term value given India’s attractive data demand growth outlook as 4G and smartphone penetration is still very low. While we remain cautious in this period of high uncertainty, we continue to seek good, long-term opportunities in India.”

The investment comprises a portfolio of around 135,000 communication towers which forms Reliance Jio’s telecommunication network, GIC said. 

More towers are planned, increasing the total number of towers in the transaction perimeter to around 175,000, it added. 

The statement further said that Jio is an “anchor tenant” that will provide the tower company with a source of income for the next 30 years. 

Reliance Jio Infratel, which houses Jio’s telecom tower assets, was 51% owned by Tower Infrastructure Trust, an infrastructure investment trust (InvIT) sponsored by a unit of RIL. The remaining 49% was owned by billionaire Mukesh Ambani-led RIL.

While Brookfield now has indirect control of the assets by investing in the InvIT, GIC and British Columbia Investment are minority shareholders in Tower Infrastructure Trust. 

British Columbia Investment is a Limited Partner (LP) with Brookfield and a shareholder in its publicly listed entity. 

It is not clear if GIC, too, is an LP with Brookfield, though the two have worked together in large global transactions especially in the infrastructure sector. This includes a recent deal to buy American railroad firm Genesee & Wyoming Inc at an enterprise valuation of $8.4 billion.

GIC in particular is a large investor in infrastructure and real estate sectors globally. In fact, GIC and Brookfield even compete for big-ticket real estate transactions in India.

The Singaporean sovereign fund is a known LP and active co-investor with several large global PE funds. It is an aggressive investor in India both via its direct PE-style investments as also through public market deals.

GIC has been particularly big on India’s infrastructure sector. In May last year, it joined forces with private equity firm KKR & Co to pump Rs 2,060 crore into Indigrid, a power transmission InvIT.

Among other infrastructure companies, GIC backs roads major Gayatri Projects as well as renewable power company Greenko.

In June last year, citing unnamed officials, the Mint newspaper had reported that GIC was in the process of deploying up to $1 billion in India’s roads sector, via a dedicated platform.

It is quite common for LPs or institutional investors in PE funds to separately put money in portfolio companies alongside funds they have already backed. 

Such deals allow PE funds to make bigger investments than what their mandate may allow while spreading the risk. 

For LPs, such investments make for better economics as they do not pay fees to a third-party fund manager for the portion of investment made as a co-investor.

Brookfield’s India play

As VCCircle noted in July 2019, the Canadian firm had been looking to establish a foothold in India’s telecom tower segment for the past few years. 

In October 2016, it had signed a pact to buy a majority stake in the tower assets of Reliance Communications Ltd (RCom), run by Mukesh’s younger brother Anil, for $1.65 billion.

That deal fell through the following year. RCom eventually went bankrupt.

In December 2017, Jio agreed to buy all of RCom’s wireless assets, including towers. However, the deal was called off earlier this year due to a lack of approvals from lenders and government authorities.

Brookfield owns and operates one of the largest infrastructure portfolios in the world, with about $65 billion of assets (including wind, hydro and solar assets) under management, its website shows.

In India, Brookfield has made some other significant infrastructure bets, too. These include a $300 million transaction in 2017 in the largest private equity buyout deal in the roads sector.

In the hospitality sector, Brookfield signed a pact earlier this year to acquire four Leela Hotels for $576 million.

It had also sealed a $1.9 billion transaction as part of a consortium to acquire a gas pipeline from companies controlled by RIL chairman Mukesh Ambani.

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