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Warburg Pincus   Bharti
 

Warburg Pincus Bharti

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Mergers & Acquistions

Mergers & Acquistions

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    Warburg Pincus   Bharti Warburg Pincus Bharti Presentation Transcript

    • Warburg Pincus & Bharti TeleVentures The Dawn of PE In India
    • The Deal……………………
      • One of the most reputed PE firms of US
      • Investments worth more than $ 26 billion
      • In more than 100 Companies
      • Presence in US, Europe & Asia
      • One of the first PE investors in India
      • Real Interest Rates too high to sustain
      • Large Market – Double edged sword
      • Increasing GDP growth
      • Democratic Government
      • Growing Middle class consumers
      • Majority of population in between 18 – 25 yrs of age
      • Strong Education System
      • IT Boom
      Macro Factors – India
    • Positive Macro Factors – Sector
      • National Telecom Policy encouraging
      • Domestic Private Investment
      • Foreign Direct Investment
      • Competition to Fixed Line Service Providers
      • High Installation Fees
      • Order Backlog
      • Mobile Telephony considered as a status symbol
      • Markets were Price Elastic
      • No Player having Pan-India presence
      • Telecommunication is a pre-requisite for Growth
    • Negative Macro Factors – Sector
      • Lack of Regulatory Clarity
      • Economic viability of Telecommunication Project
      • Restriction on Licenses
      • Monthly Fixed License fee to government
      • No investor interest – No clarity on Exit route
      • Bharti having presence only in North India
    • Difference INDIA
      • Leverage buyouts
      • Control
      • Layoff’s
      • Management changes
      • Part of Strategic plan
      • Reduce competition
      • Banking on Growth Story
      • Long Term Investment
      • Financial & Operational efficiency
      • Working with Management
      • Strategic Investor
      • Accelerated growth & competitiveness
      • Enhancing Shareholder Value
    • Landmark Transaction
      • The Deal equaled one – third of total PE investments in India till date
      • PE investments in India were only 0.2% of total GDP
      • FDI was only about 1% of GDP
      • First Investment done banking upon the “India Growth Story”
      • Foreign Exchange fluctuation was a matter of concern
      • Investment in Unorganized Sector
      • Investment in a privately owned company
    • WP – Information Gaps
      • Bet on forecasts
      • Loss making business
      • Entering as a minority stakeholder
      • Ambiguity in Government Policies
      • Fragmented Sector – Cost efficiency
      • Mobile telephony was still a Luxury among Indians
      • Business model based on Cost-Volume-Pricing
    • Contrarian Call
      • Business Growth Opportunities
      • High Interest Costs
      • Confidence on Management
      • India’s Demographic Pattern
      • Open Economy
      • Global Presence
    • Mittal’s Approach - Valuations
      • Valuation not to be done on the conventional method of ARPU
      • New Methods focus on efficiency
      • Gross Revenue
      • Operating Efficiency
      • Capital Efficiency
    • Our take on Valuations Method
      • Optimum Utilization of Resources
      • Gross revenue is the major CSF
      • Business model is based on increasing Subscriber base to cost efficiency
      • Price Elastic market
    • Shareholder Value & Corp Governance
      • Think Big !!!
      • BT- Initial Suboptimal Strategy – Bell North
      • WP -Change in Plans – Pan India Presence
      • Growth Plans !!!
      • BT - Management Approach to build business from scratch
      • WP - Time sensitive: Growth by Acquisition
      • Restructuring the corporate structure
      • BT- Adhoc structure
      • WP – Buy back stakes to reduce to conflicts of interest
      • Inclusion of Strategic Partners - SINGTEL
    • Exit………………………..
    • The Road ahead……………..