Birla may take pvt placement route

The Aditya Birla group is likely to pare its stake in Idea Cellular through the private placement route ahead of its initial public offering, which is expected to hit the capital market in September. Post-IPO, the Birla group plans to have over 51 per cent stake in the telecom company.

Industry sources said Birla TMT Holdings, a part of the Aditya Birla group, would sell nearly 75 crore (750 million) shares, representing slightly over 33 per cent stake in Idea, to a clutch of financial investors and hedge funds in the private placement deal.

Although the Birla group today announced that Birla TMT intended to sell the shares it acquired from the Tatas to financial investors on the same terms, industry sources said the company might receive a better price from the selloff.

"The sale to the financial investors will act as a benchmark for the pricing of the IPO," they said.

After the acquisition of the Tata group's entire stake, the combined holding of the Birla group will increase to 222 crore (2.22 billion) shares from the existing 113 crore (1.13 billion) shares. A back-on-the-envelop calculation suggests that Idea's IPO will offer nearly 140 crore (1.4 billion) shares.

If the industry sources are to be believed, the IPO would be priced at nearly 10 per cent premium over the price the Birlas paid to the Tatas. The Birla group would pay a total of Rs 4,406 crore (Rs 44.06 billion) or Rs 40.51 apiece.

The IPO may carry a price tag of around Rs 45 per share. The Birla group had changed its strategy on Idea. Initially perceived to be an investment, Idea has emerged as one of the core businesses of the group.

Aditya Birla Nuvo, the new avatar of Indian Rayon after merger of Indo Gulf Fertilisers and Birla Global Finance, will be the investment vehicle for the telecom business.

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