-- Reliance says will await supportive market conditions for
unit IPO
-- IPO got tepid demand from institutional investors amid weak
market conditions -- source
-- Book-building for the offer was set to end Friday --
source
MUMBAI--Reliance Communications Ltd. (532712.BY) on Friday
pulled the initial public offering of a unit that holds its
undersea cable assets, adding to a string of large IPOs that have
been scrapped in Asia this year.
Reliance said in a statement that it would list the unit at a
later date when there were more "supportive market conditions and
easing of prevailing global uncertainties." The company, which is
India's second-largest mobile-phone operator by customers, didn't
elaborate on a time frame for a subsequent IPO.
Reliance had hoped to raise between $700 million and $1 billion
by selling shares in Global Telecommunications Infrastructure Trust
on the Singapore stock exchange, according to people familiar with
the deal. Book-building for the IPO had been going on for nearly
two weeks and had been extended at least twice. It was set to end
on Friday.
However, the IPO got only tepid demand from institutional
investors amid weak market conditions, a person familiar with the
matter said Friday. Had it gone through, the IPO would have been
the largest such offering in Singapore this year.
Its cancellation underscores the skittishness of investors
toward equity offerings in Asia in recent months.
Earlier this year, motor sport franchise Formula One put off a
$2.5 billion IPO in Singapore. In late May, a $1 billion IPO by
U.K. jeweler Graff Diamonds Corp. was scrapped in Hong Kong, again
due to poor market conditions.
To entice investors, Reliance was offering a yield of around
11.5% on its trust, a person with knowledge of the deal said on
Friday. This would be nearly twice the average yield being paid by
business trusts and real-estate investment trusts in Singapore.
The Reliance trust owns an undersea cable network, which carries
telecommunication signals across more than 68,000 kilometers in
Asia, the Middle East, Europe and the U.S., the company website
said.
Some large investors, including Investment Corp. of Dubai, China
Investment Corp. and Singapore state-owned fund Temasek Holdings,
had committed money to the IPO, two people familiar with the
discussions said on Thursday.
But one person said on Friday that the investors' commitments
were lower than expected at $200 million. "There is a big hole,"
this person said. The person declined to say what the gap was
between what institutional investors had committed and Reliance's
target.
This is a big setback for Reliance Communications, owned by
billionaire Anil Ambani. The company needed the IPO funds to cut
its massive debt, which stood at $6.58 billion as of March 31,
according to company data.
This was the second time that Reliance had tried to raise cash
from its undersea assets. It abandoned such an attempt in 2009 due
to valuation differences.
In 2011, the company was talking to private-equity firms like
Carlyle Group LP (CG) and Blackstone Group LP (BX) to sell a
substantial stake in its tower unit, Reliance Infratel Ltd.,
according to people familiar with the matter then. But nothing came
of it, according to them.
Write to Shefali Anand at shefali.anand@wsj.com and Kenan
Machado at kenan.machado@dowjones.com
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