Swiss PE Firm Partners Group in Talks to Acquire ACT Broadband

Sources have reported that Partners Group, a Swiss private equity fund, is negotiating with the private equity owners of Atria Convergence Technologies Ltd. (ACT) to acquire it.

Partners Group in talks with ACT Broadband

Sources report that Partners Group will most likely buy True North and TA Associates' out. These two companies together own a 95% stake in the company. Also, they have been looking to monetize their half a billion dollar investment in ACT 6 years ago. The investors seek a valuation of $1.4 billion to $1.6 billion. This depends of whether they can retain a minority stock or exit altogether.

True North and TA Associates filed to raise Rs 800 crore via an IPO in 2017-18. However, stiff competition from financially stronger opponents reduced valuation and that decreased investor enthusiasm in the firm.

CARE Rating said in March that ACT has improved its financial risk profile at the standalone level in a sustained manner. It has a total outside liabilities to net worth below 0.25 times, and has improved market share significantly.

Furthermore, ACT’s net profit climbed to Rs 234.63 crore in FY20 from Rs 219.46 crore a year earlier, while revenue rose to Rs 1,520.27 crore from Rs 1,403.19 crore in FY19. However, aggressive pricing in broadband has impacted company's market share and ARPU.

At the moment, Partners Group is carrying out due diligence before submitting the final bids in a few weeks. However, the second wave of COVID-19 has slowed the process. Also, investment bank UBS is advising the Swiss PE fund.

Partners Group, which has $109 billion in assets under management worldwide, does not have a large presence in India. It acquired AU Housing Finance in 2016 and Vishal Mega Mart in 2018, but that is about it.

A Brief History of ACT

With 1.7 million subscribers, ACT Broadband is the fourth-largest wired broadband service provider after BSNL, Bharti Airtel and Reliance Jio.

ACT also operates cable TV in Bengaluru, Hyderabad, Chennai, Nellore and Vijayawada. The internet service provider has a presence in 11 cities, predominantly in the south. However, it plans to enter new markets with its high-speed broadband and fibre services. The service provider is strong in south because it acquired Beam Telecom, a Hyderabad-based firm with 30,000 customers.