TA Associates and India Value Fund Advisors to invest $500M in Atria Convergence

Global private equity firm TA Associates and Indian buyout specialist India Value Fund Advisors (IVFA) will invest approximately $500 million (Rs 3,184 crore) to acquire 95 per cent stake in high-speed broadband services provider Atria Convergence Technologies (ACT).

The transaction, which is expected to close later this year, will mean a roll-over of the stake held by IVFA, an existing investor in ACT, from one fund to another. PE firms do such portfolio roll-overs when an existing fund through which it has invested is coming to an end of its life cycle.

It is not clear how much fresh investment would go into ACT. The deal, one of the largest PE transactions in India this year, values ACT at around $526 million.

As part of this transaction, the current shareholders of ACT, including majority shareholder India Value Fund III, will be divesting a significant portion of their shareholdings. IVFA is reinvesting through its new fund.

“We believe that in the coming years, India will see a significant increase in wired broadband penetration,” said Dhiraj Poddar, co-head of India at TA Associates Advisory Pvt Ltd, who will join ACT’s board at the close of the investment.

“ACT has implemented an effective and service-driven strategy using fiber-to-the-home technology to target and deeply penetrate select markets. The company has rapidly acquired broadband customers and established a strong brand across South India. With a proven record of execution, an attractive business model and an experienced and highly capable management team, we expect continued growth for ACT,” he added.

“The number of wired broadband connections in India is still very low, especially compared with growing economies such as China, and most of those connections are via slower, low-quality DSL networks,” says Naveen Wadhera, co-head of Asia at TA Associates Asia Pacific Ltd, who will also join ACT’s board.

According to Telecom Regulatory Authority of India (TRAI), of India’s 250 million households, only approximately 15 million or 6 per cent, have a wired broadband connection.

TA Associates Advisory Pvt Ltd said it is also providing advisory services on this investment round.

Bangalore-based ACT and its group companies serve over one million retail customers, offering wired broadband and cable TV services in south India, across Telangana, Karnataka, Andhra Pradesh and Tamil Nadu.

Last year, Atria Convergence secured debt from Olympus Capital Asia Credit and Kilimanjaro Netherlands BV, a subsidiary of Kilimanjaro Credit Fund.

“Broadband is becoming a necessity for many households in India as users seek always-on, reliable and fast connectivity. We will leverage our relationship with TA and IVFA as we continue to thoughtfully grow our business, increase ACT’s presence in our current markets and target new cities and regions where we see significant opportunity,” said Bala Malladi, CEO at ACT.

ACT was promoted by Atria Group. Established in 1950, privately held Atria Group has business interest spanning renewable power generation, hospitality, media services, education and real estate.

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