Goldman Sachs part exits Bharti Infratel with haircut

Goldman Sachs, which had invested in Bharti Airtel’s telecom tower arm six years ago, has made a part exit by selling over 0.6 per cent stake for Rs 226 crore ($37 million) on Tuesday.

This marks a 10 per cent loss compared with the cost of purchase in rupee terms but accounting for the depreciation in currency against the dollar, it would translate into almost 40 per cent haircut for the foreign investor in dollar terms, as per VCCircle estimates.

Goldman Sachs had invested around Rs 500 crore ($125 million back then) six years ago in Bharti Infratel. It was part of a consortium of investors which also included Temasek and KKR, which struck the agreement to invest in December 2007, at the peak of the bull-run in the stock market. The actual deal was executed in March 2008.

As part of the investment Goldman Sachs through separate arms GS Strategic and GS Investment Partners put in Rs 400 crore and Rs 100 crore, respectively, through a mix of equity and convertible debentures. Post conversion, it is estimated to have held around 1.3 per cent in the company which shrunk further with the initial public offer (IPO) in late 2012.

During the IPO, GS Strategic sold one-third of its holding at par investment value in local currency and with around 25 per cent loss given the depreciation of Indian currency against the US dollar.

In the latest transaction it has sold off its entire remaining holding. The present status of holding of GS Investment Partners could not be immediately ascertained but media reports said it remains invested.

Two other key investors Temasek and KKR have stayed put since the IPO. Temasek, however, had also part exited during the IPO with 25 per cent haircut on its US dollar investment.

Temasek, which led the over-$1.25 billion PE funding round in Bharti Infratel during FY08, had put in close to $500 million or a tad less than Rs 2,000 crore in Bharti Infratel through a mix of equity purchase and compulsory convertible debentures. Temasek, which is also an investor in Bharti Airtel, had part exited the telecom firm last year with a loss.

Both Temasek and KKR’s investment in Bharti Infratel is underwater. Goldman Sachs and other investors only partly made up for the losses with their dividend earnings over the last two years.

Bharti Infratel scrip rose 1.2 per cent to close at Rs 200 a share on the BSE in a flat Mumbai market on Tuesday.

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Bharti Infratel’s PE investors see over 25% investment value shaved off in part exit at IPO

(Edited by Joby Puthuparampil Johnson)

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