Warburg Pincus reaps Indian windfall

The US-based global private equity firm has delivered a second major profit to investors from its holding in Bharti Tele-Ventures, the Indian mobile operator.

According to a Reuters report, banking sources yesterday said Warburg Pincus had sold a 3.2 percent stake in Bharti Tele-Ventures on the Bombay Stock Exchange for US$306 million.

This is the second time Warburg Pincus has sold a tranche of shares in the firm following the IPO of Bharti in January 2002. In August 2004, it realised a 3.35 percent interest for US$208 million.

Taken together, the two sales mean Warburg Pincus has delivered over US$500 million to investors from the sale of just over 6.5 percent of the business. This represents an impressive return so far, given that it paid only around US$300 million for an 18.52 percent stake prior to Bharti’s IPO, and retains around 12 percent following the latest deal.

Bharti, which is 28 percent-owned by Singapore Telecommunications, has seen its valuation increase sevenfold since the listing in 2002. Based in New Delhi, the firm is expected to more than double its full-year tax profit to around 13.5 billion rupees (US$308 million) against a background of surging mobile phone sales in India.

In 2004, Bharti’s mobile customer base jumped 79 percent to 9.83 million users, whilst total subscribers, including fixed line users, rose 75 percent to 10.63 million. Potential demand remains enormous in a country where less than five percent of the population currently own a mobile phone, compared with more than 25 percent in China.

Warburg Pincus declined to comment on the deal.