Private equity player TA Associates has concluded its first deal after it set up shop in India last year. The firm, which has backed companies like Idea Cellular Ltd in India, has invested $45 million (Rs 204 crore) in domestic handset maker Micromax Informatics Ltd. Delhi-based Micromax will use the funds to expand its handset business to Africa and Latin America. The firm has international offices in Hong Kong, the US and Dubai.
According to report in Economic Times, TA is picking up a 20% stake in Micromax valuing the company a little above Rs 1,000 crore. “This company has been experiencing phenomenal growth. It is a very product-focussed company,” Naveen Wadehra (in pic), the Mumbai-based director of the firm, told VCCircle. Wadhera, who was previously with Goldman Sachs’ Asian Special Situations Group, will join the Micromax board of directors.
Micromax is eyeing a turnover of Rs 1,500 crore by the end of this fiscal year and Rs 3,000 crore next fiscal. Micromax started as a telecom equipment distributor in 2000 and entered the mobile handset market in April 2008. The firm has been able to quickly expand its products with its handsets now being sold through more than 45,000 retail points in 120 cities across India. It has become the third largest handset provider in India, as measured by volume, said Micromax in a release, just below Nokia and Samsung in that order.
Micromax announced the launch of Micromax C350, the first Indian Open Market Handset (OMH) for CDMA phones. It also cashed in on the huge success of the QWERTY keypad on a mobile handset that it introduced designed to speed up texting. It also introduced dual SIM technology into India and has also launched a new phone with a mosquito repellent feature in association with MTV. It offers entry level handsets from Rs 1,750 to high-end models up to Rs 16,000. But most of its mobiles are sold in the Rs 2,500-5,000 segment, where it sold 700,000 sets last month, said Wadhera. The company is focusing on Tier II and III cities besides smaller towns and rural areas.
The Indian wireless market is one of the fastest growing in the world with 10 to 15 million new mobile subscribers per month, says research by Macquarie Research and Grant Thornton. The number of subscribers has grown from approximately 100 million in 2006, to more than 400 million today and is expected to grow to over 800 million over the
next three years.
Besides Idea Cellular, TA Associates has also invested in GlobeOp Financial Services, a specialist BPO company. On the deal-making side, “telecom and healthcare look particularly exciting going forward”, said Wadhera. The private equity firm recently closed its new $4-billion
fund, TA XI, L.P. The fund is the successor to TA X, a $3.5-billion fund which was closed in March 2006. TA Associates has offices in Menlo Park, London, Boston and now in Mumbai.
Goodwin Procter LLP and Lexygen provided legal counsel to TA Associates. Grant Thornton served as the sole financial advisor to Micromax and INDUS G&D Law provided legal counsel to Micromax.