Providence buys 15% in Idea for Rs 1,800 cr

Providence Equity Partners of the US, which had made an abortive attempt to enter India through the acquisition of C Sivasankaran's stake in Aircel last year, has picked up a 15 per cent stake in the Aditya Birla Group-controlled Idea Cellular for an undisclosed amount.

Industry sources pegged the deal at Rs 1,800 crore, valuing the company at Rs 12,000 crore.

The deal, signed in New York on Friday, marks Providence's entry into India. The private equity fund, with $9 billion under its management, has a big exposure to infotech and telecommunications companies across the globe.

Providence has acquired 338.85 million shares of Idea Cellular, paying over Rs 53.12 per share.

At this price, it has paid a 31 per cent premium over the rate (Rs 40.50) at which the Birla group had bought the Tata group's stake in Idea this April. The Tata group had sold its entire holding of 48.14 per cent in Idea Cellular for Rs 4,406 crore.

Providence had earlier planned to pick a one-third stake in the company, but decided to settle for less. After the sale, the Birla group's holding in Idea Cellular has come down to 83.3 per cent from 98.3 per cent.

C Sivasankaran holds 1.7 per cent in the company.

Sanjeev Aga, newly appointed managing director of Idea Cellular, confirmed the deal but declined to comment on its valuation, saying "this is in the private domain".

The Providence acquisition price will act as a benchmark for further stake sales in Idea as well as the pricing of its initial public offering.