Private Equity News & Analysis

TA invests $45m in Indian mobile sector

The 41-year-old private equity firm has acquired a minority interest in Micromax as the company looks to make the most of a rapidly growing mobile subscriber base in India.

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TA Associates has acquired a minority stake in Micromax Informatics, an Indian mobile handset provider, for $45 million. The size of the stake acquired was not disclosed.

Set up in 2000, New Delhi-headquartered Micromax entered the mobile handset market in April 2008 and is today the third largest handset provider in India, TA said in a statement. The company sells handsets through more than 45,000 retail outlets across 120 Indian cities.

TA is the first institutional investor in Micromax and although the firm has invested in India in the past, this is its first investment in the country since opening its Mumbai office in 2009.

In October 2006, TA acquired a minority stake in Idea Cellular, an Indian provider of wireless communications services and a subsidiary of the Aditya Birla Group.

Ajit Nedungadi and Naveen Wadhera, managing director and director at TA Associates respectively, will join Micromax’s board. 

“The Indian mobile handset market is going through a fundamental share shift towards local branded players,” Nedungadi said in a statement, adding that as a leading local brand, Micromax has introduced phones that specifically address local needs and created a unique position in the market.

The Indian market is seeing 10 to 15 million new mobile subscribers each month, the firm said, citing data from Macquarie Research and Grant Thornton. The total number of mobile subscribers has grown from about 100 million in 2006 to more than 400 million today. It is expected to grow to more than 800 million over the next three years. 

Earlier this week, TA agreed to acquire a majority stake in Munich-headquartered eCircle, an email marketing service provider, for more than €60 million.

In August 2009, the firm closed TA XI, its 11th growth investment fund, on its $4 billion hard-cap, beating its $3.5 billion target. Its previous fund closed on $3.5 billion in March 2006. TA manages more than $16 billion through offices in Boston, London, Menlo Park and Mumbai and has invested in more than 400 companies worldwide.