Swiss alternative investment firm Partners Group said on Friday it will acquire a controlling stake in Atria Convergence Technologies (ACT), a provider of high-speed fibre-optic broadband, from private equity firms True North and TA Associates.
Partners Group said it has been a joint investor in ACT since 2016 and will acquire a controlling stake in a transaction that pegs the company’s enterprise value at nearly $1.2 billion.
This would count among one of the largest secondary (PE to PE) deals in India. Indeed, Partners Group itself has sealed $1-billion secondary transactions related to India when it bought Vishal Mega Mart along with Kedaara Capital from TPG and Shriram Group. It also did a similar-sized transaction with GlobalLogic where it picked up the stake from Apax Partners.
ACT had previously attracted True North and TA Associates as investors. TA Associates will retain a minority stake in the firm. True North, which had originally invested in 2008, had rolled over its investment to a newer fund when TA Associates entered the cap table. At that time True North is learnt to have sold a 20% stake to TA Associates. The two firms held 95% stake in ACT together.
It is not clear when Partners Group entered as an investor but it is believed it came as a co-investor along with one of the two frontend PE investors during 2016. That transaction valued ACT at around $525 million.
This deal means TA Associates would be part-exiting with a little over two times its investment, making around 15% annualised returns in rupee terms. Its dollar returns would be lower still.
True North’s original investment, which it exited in 2015, had churned out much better multiples of around seven times, as per estimates by The Capital Quest. The latest exit would still mean a good return in absolute value.
Headquartered in Bangalore with over 7,000 employees, ACT is a multi-service operator offering a package of internet, TV, data, and other broadband services. The company is led by Bala Malladi and serves around 2 million wired broadband subscribers across 19 cities in India.
Manas Tandon, managing director of private equity at Partners Group, said, “The company is an excellent opportunity for us to support the transformation of a growing business through expansion into new markets and development of new product offerings.”
Vageesh Gupta, member of management at Partners Group, added: “Data consumption in India is booming yet our thematic research shows the wired broadband market is supply constrained with the country continuing to have amongst the lowest fiber-to-the-home penetration in the world.”
He said the firm would focus on expanding ACT’s share in new geographies and customer segments.
Partners Group’s other investments in India include Vishal Mega Mart, franchisor of the Vishal Mega Mart brand and wholesale supplier to Vishal-branded hypermarket stores; mortgage lender Aavas Financiers and logistics company Ecom Express.
ACT is Partners Group’s third investment in the telecom space this year after Unity Digital, a telecom tower platform in the Philippines, and Eolo, an Italian fixed wireless access broadband provider.
Partners Group had $119 billion in assets under management as of June 30, 2021.