Valuation not the only cause for delay: Srei chief

After tough negotiations that lasted for nearly two years, the deal between American Tower and Viom Networks is finally done. But it was not an easy one to conclude, with negotiations almost on the verge of breaking down earlier in May.

ATC has been in talks with Viom Networks since early last year but the negotiations picked up only in October.

The big point of difference was of the valuation, with Viom promoters wanting to use Bharti Infratel as the benchmark.

Srei Infrastructure had also looked at exiting Viom through an Initial Public Offer. In a conversation with BusinessLine, Hemant Kanoria, Chairman and Managing Director of Srei Infrastructure Finance Ltd, talks about the hick-ups and how the deal was clinched. Excerpts:

Why did it take so long for the deal to happen? Was the valuation gap so wide that it took two years to bridge it?

It was not just the valuation gap. If we had had only one to two shareholders, the decision would have been taken much faster.

But we have other shareholders and many of them wanted to remain; they didn’t want to exit.

On the other hand, ATC wanted 51 per cent and they weren’t willing to relent below that because they wanted management control.

They are a large company, and therefore wanted management control of such a large entity.

Finally, it happened after discussions with other shareholders.

What finally clinched the deal?

Some of the private equity funds were ready to exit because the fund was coming to a close. Everybody was getting a good value and that was the reason the transaction finally happened.

Why did you choose to exit the business now, at a time when demand for towers is going to be exponential?

For the last two years we had been discussing this with various investors. We held just over 18 per cent and were managing the business with just that. It is not that easy when the company needs more funds to grow.

In Srei Infrastructure, which is a listed company, the shareholders were not in favour of us continuing. We thought it would be good for us to exit now, because it is a good value addition for Srei.

Srei Infra has ventured into other countries like Myanmar. Would that be part of this deal?

No, it won’t. We didn’t do much there anyway. You see, Myanmar was more of services. We have not done this kind of investment there.

Could you break down the financials, in terms of how much Srei is poised to get out of this deal?

Srei will be getting about ₹2,900 crore from this deal.

Is there a no-compete clause in the deal with ATC for which you are getting a fee?

Yes. That is also part of this ₹2,900 crore that we will be getting from the deal.

What do you plan to do with the money?

Srei is a financial institution and we will be continuing lending, which is our business. Also, when there is any good investment opportunity, we will invest in that.

Have we seen the last of Srei in telecom?

We have to be mindful of the non-compete clause with ATC. But other than that, if there is anything interesting we are always open to it.

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