Bahrain’s Batelco may be poised to buy a controlling stake in Reliance Globalcom. Both companies have confirmed that such talks are underway, however nobody has signed on the dotted line just yet. The deal supposedly under consideration would keep Reliance as a minority owner.
Reliance has been trying to leverage its Globalcom unit to raise cash for several years now. They had looked at selling the division outright for a while but found no takers near the asking price. They then tried for an IPO in Singapore but were stymied by market conditions last summer.
For its part, Batelco has been looking for ways to grow its presence both in India and internationally overall. Taking a majority stake in Globalcom would give them the physical assets to extend their influence around the world. It’s an interesting idea, with the followup question being just how much in the way of resources they’d plan to invest in further growth of the asset base. Globalcom has been slowed down by its parent’s balance sheet pressures for some time now.
Reliance Globalcom’s primary assets are the submarine cables and related infrastructure that mostly derive from the acquisitions of Flag and Yipes augmented by organic growth over the years. They’ve been upgrading to 100G piece by piece, including yesterday’s announcement on FA-1 South.
Batelco along with some Middle Eastern fund have supposedly valued the division at $1.3B. That seems to be roughly where Reliance had hoped the IPO might land, although of course it’s a far cry from the $2-3B they had originally been floating as a sale price a few years back. But with a more realistic price and some long term investors with potentially deep pockets, perhaps Reliance has finally found the buyer they’ve been looking for.