Private equity major TA Associates has exited its five-year-old pre-IPO investment in telecom firm Idea Cellular through share sales in open market, a top company executive said. According to VCCircle estimates, TA Associates has made around 2x returns on its investment of around Rs 450 crore.

“We exited the investment over a period of past 5-6 months,” Naveen Wadhera, director and country head of TA Associates Advisory Pvt Ltd told VCCircle. However, he did not comment on the exact returns made by the global PE firm.

TA Associates had invested around Rs 421 crore in Idea Cellular in 2006, acquiring the shares from the promoters at a price of Rs 41.5 a share. The PE firm had invested along with other investors like Sequoia Capital and ChrysCapital during the pre-IPO round of the company.

This was around the same time when Providence invested over $400 million in Idea Cellular in one of the biggest private equity deals in the country.

TA Associates then sold almost a third of its shares as markets turned turtle in the first half of 2008 and is estimated to have taken out the principle amount it had put in. However, it bought more shares of Idea Cellular in early 2009 when stock market valuations hit a bottom, taking its total commitment to over Rs 450 crore.

The PE firm sold around half of its remaining stake in the telecom operator in mid-2009 and exited completely during the past few months. It is estimated to have pocketed over Rs 900 crore in its exit in multiple tranches.

This comes soon after ChrysCapital sold almost its entire 2.7 per cent stake in Idea Cellular for Rs 751 crore ($170 million) in July this year, completely exiting the firm. Telecom operators’ shares have taken a flight in the last quarter over news of tariff revision in an otherwise competitive market where margins have been under pressure.

Idea Cellular scrip closed at Rs 98 a share, down 0.2 per cent on the BSE on Thursday in a strong Mumbai market.

PE firm Providence is still holding on its investments. Its 9.99 per cent stake is valued at over Rs 3,200 crore as of now.

Idea reported more than 24 per cent increase in net sales to Rs 15,470 crore with net profits declining 3.4 per cent to Rs 827 crore for FY11. It is the fourth largest telecom firm in the country by gross revenue and is also backed by Axiata (formerly Telekom Malaysia).

Bulk of the shares held by Axiata was acquired through a preferential allotment three years ago at a price of Rs 156.9 per unit. Axiata also held stake in Spice Communications, which was acquired by Aditya Birla Group-led Idea Cellular three years ago.

Last month, Axiata had raised its holding in Idea Cellular to 19.98 per cent by acquiring an additional 0.9 per cent stake through open market purchases in a deal worth Rs 306.69 crore ($67.5 million).

See Our Earlier Reports:


ChrysCapital Sells Bulk Of Its 2.7% Stake In Idea For Rs 751Cr 

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