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Indiantelevision.com's Digital Edge

New Silk Route buys 23% in Ortel for Rs 600 million

By SIBABRATA DAS
Indiantelevision.com Team

(15 March 2008 9:00 pm)

MUMBAI: Private equity fund New Silk Route has acquired 23 per cent stake in Ortel Communications Ltd. for Rs 600 million, pegging the valuation of Orissa's leading multi-system operator (MSO) at Rs 2.61 billion.

With this, the promoter holding will come down to 59 per cent while SREI Group and Actis will hold the balance 18 per cent. "We have raised Rs 600 million and New Silk Route will hold 23 per cent in the company," Ortel Communications promoter Jagi Mangat Panda tells Indiantelevision.com.

Earlier Indiantelevision.com had reported that SREI Group was picking up around eight per cent stake in Ortel. Actis, a leading private equity investor in the emerging markets, had made a prior investment holding 13 per cent.

Ortel will be issuing preference shares compulsorily convertible on or before 30 June, 2010. "The existing shareholders will proportionately get diluted. The promoters will have 59 per cent while Actis and SREI's holding will amount to 18 per cent equity," says Ortel Communications executive vice-president Bibhu Prasad Rath.

Ortel will require Rs 2.5 billion to expand its operations. "We will be raising a debt of Rs 1.25 billion and are not looking at further diluting equity. We are extending our services to Kolkata, Raipur and Vizag. We are adding five more cities in Orissa, to take our total presence in the state to 15. The funds will also be used for digital cable, broadband and setting up a triple play facility in selected markets," says Rath.

This is New Silk Route's first investment into the cable TV sector. The private equity fund, floated by former McKinsey global chief Rajat Gupta among others, has already invested in INX Media which runs the 9X and 9XM channels.

Mauritius-based NSR PE has been active in the Indian market, picking up 72 per cent stake in Hyderabad-based Aster Infrastructure and also investing in Reliance Telecom Infrastructure Ltd, the tower arm of Reliance Communications.