Report: IDFC Private Equity to inject INR2.5bn in Quippo

The India-focused private equity firm is reportedly upping its stake in the publicly traded telecom infrastructure company.

The telecom infrastructure sector in India continues to draw private equity interest.

Following its initial investment in Quippo Infrastructure Equipment, Quippo Telecom Infrastructure's holding company, in March 2007, IDFC Private Equity is now reportedly investing an additional INR2.5 billion ($51 million; €36.4 million) in the telecom infrastructure company.

IDFC Private Equity already owns a 11.24 percent stake in the business. It invested INR15 billion in Quippo Infrastructure Equipment in March 2007 alongside the Government of Singapore Investment Corporation.

The private equity firm was not immediately available for comment.

Quippo, the telecom tower affiliate of SREI Infrastructure Finance, an Indian private sector infrastructure financing company, will raise about INR9 billion by issuing additional shares and through the sale of shares in the secondary market, according to Indian newspaper Mint.

IDFC Private Equity and Oman Investment Fund, both current stakeholders in the company, will subscribe to additional shares that will be issued, the paper noted. The remaining INR15 billion will be raised through mezzanine capital and debt, Hemant Kanoria, chairman and managing director of SREI, told Mint.

A source at one of the stakeholders told the paper that besides the INR2.5 billion that IDFC Private Equity will invest, the IDFC group may participate in providing debt to the company through its other arms. The remaining equity will be invested by Oman Investment Fund and SREI, the source added.

Quippo is raising the additional capital to fund its January 2009 merger with Tata Teleservices whereby Quippo is required to make an upfront cash payment of INR24 billion and transfer a portfolio of 5000 towers to Tata Teleservices.

Other telecom infrastructure majors in India have also received substantial investments in the last couple of years. In May 2008, Providence Equity Partners invested $640 million in Aditya Birla Telecom, a subsidiary of Idea Cellular, which besides providing telecom services, also holds a 16 percent stake in Indus Towers, a joint venture by Vodafone Essar, Bharti Airtel and Idea Cellular to provide passive infrastructure services to various mobile operators.

Bharti Infratel, a wireless telecom tower infrastructure provider and subsidiary of Indian telecommunication company Bharti Airtel, received an investment totaling $1.25 billion at the beginning of 2008. This included a $250 million investment from global buyout firm Kohlberg Kravis Roberts and another $1 billion from India Equity Partners, AIF Capital, Temasek Holdings, Citigroup, Goldman Sachs and Macquarie Bank.

SREI and Quippo did not respond to requests for comment.