A clutch of private equity funds, including Softbank Capital and Blackstone, are in the race to acquire a minority stake in Flag Telecom, the submarine cable arm of Reliance Communications.
Reliance Communications is planning to raise over $500 million by diluting a 20-25 per cent stake in Flag Telecom. The company is planning to go in for a private equity placement prior to a public offering.
"The unlocking of value in Flag Telecom, which operates our undersea cable network, will be done through a private equity placement of equity and/or international listing of shares of the company by the end of this year," Chairman Anil Ambani told Reliance Communications shareholders at the company's annual general meeting on Tuesday.
Softbank is a Japanese private equity fund with interests in telecommunications and technology. Blackstone is the world's largest buyout fund.
Reliance Communications acquired Flag Telecom in 2003 for $209 million. On Monday, Flag Telecom acquired 100 per cent equity in US-based Yipes Communications for $300 million. The company is also planning to spin off its BPO business as a separate subsidiary. Reliance BPO employs 7,800 people. "We are planning to create a global size business in the BPO space," Ambani said.
Reliance Communications also announced a Rs 20,000 crore capital expenditure programme to expand its network coverage and enhance its reach.