Flag Telecom, a 100 per cent subsidiary of Reliance Communication (RComm), has mandated Goldman Sachs and Deutsche Bank as lead managers for the maiden initial public offering (IPO) on the London Stock Exchange.
Top sources say the bankers have valued the company at $2 billion. The IPO will be completed in the next three months. The company will divest 10-15 per cent of its equity through the IPO.
Through the IPO, the Anil Dhirubhai Ambani Group (ADAG), will be able to recover virtually ten times the value it paid for the company in 2002. It had paid $211 million to buy Flag.
Flag, which runs an international fibre bandwidth all across the globe, has announced an investment of Rs 7,000 crore to set up a new generation network which will provide high speed transmission. The cash from the IPO will be used to partly finance the ambitious project which is expected to be up and running by 2009. The new network will link to the Mediterranean to Greece, Cyprus, Turkey, Malta, Libya and Lebanon, Trans-Pacific to the US and Japan, Far East and Africa.
The 65,000 km cable network connects 40 countries across four continents and has over 200 international telcos and Internet service providers (ISPs) as its clients.
Flag has also recently completed Falcon, a $400 million fibre project which links West Asia to the rest of the world.
Flag Telecom is the second company of the Anil Dhirubhai Ambani Group after Reliance Energy which is being listed on the London Stock Exchange. Over 25 Indian companies are already listed on LSE which include ACC, Amtek Auto, Crompton Greaves, GAIL just to name a few.
A Reliance Communications spokesperson, however, declined to comment on the issue.
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