I Squared Capital, Stonepeak eye Vodafone’s Indus Towers stake in $2.3 bn deal

The talks are in advance stages, the people said. 

On 14 June, Reuters reported that Vodafone Group was looking to sell its entire stake worth $2.3 billion, as of Friday's closing stock price in Mumbai, in India's largest telecom tower company through stock market deals and had hired Bank of America, Morgan Stanley and BNP Paribas to manage the sale.    

“I Squared will not be able to comment on this story. However, if the firm has future news or announcements to share, we’ll be sure to be in touch," said an I Squared Capital spokesperson in an emailed response.

Bank of America and BNP Paribas spokespersons declined to comment. Queries emailed to the spokespersons of Indus Towers, Vodafone Group, Stonepeak, Morgan Stanley, and Bharti Airtel did not elicit a response until press time.

While Vodafone Group Plc owns 21.5% through various entities in Indus Towers, which has over 219,736 towers covering all 22 telecom circles, Bharti Airtel Ltd is the largest shareholder with a 47.95% stake.

Also Read: Vodafone Idea’s post-FPO priority: Clearing vendor dues

The British telecom operator has pledged its stake in Indus Towers to settle the dues—estimated to be at around ₹10,000 crore—owed by its Indian arm Vodafone Idea to the mobile-tower operator. 

It is unclear whether the proceeds from this sale would be used for repaying Indus Towers’ dues.

Vodafone Idea dues

Vodafone Idea, which is among the key customers for Indus Towers, raised ₹18,000 crore in India’s largest follow-on offer (FPO) in April. However, it cannot use the proceeds to pay up Indus Towers’ dues, chief executive of Vodafone Idea Akshaya Moondra said at the launch of the FPO. 

While Indus Towers has asked Vodafone Idea to pay up its dues in full, Sunil Mittal, chairman of Bharti Airtel, has said Vodafone Idea should pay its past dues to Indus Towers, failing which services could be stopped.

In 2022, Vodafone Group sold over 7% in Indus Towers, of which 4.7% was acquired by Bharti Airtel. The proceeds were routed to Vodafone Idea to reduce its debt. Currently, its debt stands at over ₹2.1 trillion.

Also Read: Vodafone Idea's FPO would be good for lenders, bad for shareholders

While Stonepeak is a New York-headquartered alternative investment firm with $65.1 billion in assets under management, I Squared Capital is no stranger to India’s infrastructure sector. 

In April 2015, I Squared Capital invested $150 million in Amplus Energy Solutions Pvt. Ltd that was sold to Malaysia’s state-run oil and gas company, Petroliam Nasional Bhd or Petronas, in April 2019 for ₹2,700 crore. It has also set up a climate solutions platform—Hexa Climate Solutions—with Amplus founder Sanjeev Aggarwal wherein the New York-based PE fund will invest around $500 million. 

I Squared Capital is also an investor in Singapore-based Cube Highways and Infrastructure Pte. Ltd, one of India’s largest private sector operators of toll roads, that is one of the two final bidders in the fray to acquire the roads assets of National Investment and Infrastructure Fund's (NIIF's) Athaang Infrastructure for the deal having an equity value of around ₹4,000 crore. Canada Pension Plan Investment Board (CPPIB) is the other final bidder.

Also Read: CPPIB, Cube in last lap for NIIF's Athaang road assets