Birlas to place 33% of Idea with financial investors

MUMBAI: The deal between Birlas and Tatas for the latter’s 48% stake in Idea Cellular has been consummated, with the unlisted Birla TMT Holdings thought to have bought 33%. The Birlas may now place the 33% with financial investors at a price of around Rs 45 per share, said sources. This would enable them to make a profit of about Rs 5 per share since they have acquired the shares from the Tatas at a price of Rs 40.5 per share.

Sources close to the Birlas, however, strongly denied that they would place the shares at a higher price. “We have earlier stated that the shares will be placed at the same price as the transaction with the Tatas,” they said.

A number of banks and financial institutions, including the private equity arms of Citigroup and IDFC, are believed to have put in bids for part of the 33% stake. Veteran investment banker Nimesh Kampani is said to be handling the possible sale to financial investors, one source said. However this could not be confirmed. ET was unable to contact Mr Kampani.

The Birlas had agreed to buy out the Tata stake in a Rs 4,406 crore deal in April this year, valuing the company at about Rs 12,000 crore. With the transaction now virtually complete, the Birla stake in Idea Cellular has touched 98% from the earlier 50.14%. The transaction has ended the joint venture between the Tatas and Birlas .

This is the first time that Idea Cellular has a single parent. The company has suffered in the past due to confusion over ownership. It has lagged behind in terms of growth across circles and has not been as aggressive as its rivals, Bharti and Hutchison. It is the fifth largest mobile operator in India with a subscriber base of 8m subscribers as of May ’06.