Carlyle fund buys 25% stake in Bharti Airtel’s Nxtra data centres
Nxtra will use investment to scale up infrastructure to meet rapid digitization demands
8 Jul 2020 | Michael Marray

US private equity giant Carlyle Group’s Comfort Investments II fund has signed an agreement to pay US$235 million for a 25% stake in the New Delhi-based data centre firm Nxtra Data.

Nxtra, listed on the National Stock Exchange of India, offers secure data centre services to leading Indian and global enterprises, governments, hyperscalers, start-ups, and small and medium-sized enterprises.

The firm, which has ten large data centres and more than 120 edge data centres across India, provides customers with co-location services, cloud infrastructure, managed hosting, data backup, disaster recovery, and remote infrastructure management.

Nxtra is a wholly owned subsidiary of Bharti Airtel, which is India’s largest integrated telecommunications operator. Bharti Airtel will continue to hold the remaining 75% of the company.

The transaction is subject to the necessary regulatory approvals, including approval from the Competition Commission of India.

India is currently witnessing a surge in demand for secure data centres, as businesses undertake digital transformation and consumer demand for digital services increases.

Bharti Airtel and Carlyle note in a statement that the expansion of hyperscalers across the region following the government’s directive on data localization is propelling a lot of this demand. Other market drivers include the growth in user data and increase in cloud penetration.

Nxtra, which is building multiple large data centres across the country to capture these growth opportunities, says it will use the proceeds from this transaction to continue scaling up its infrastructure and offerings across the country. Last year, the company commissioned a state-of-the-art data centre in Pune, and it is building more centres in Chennai, Mumbai and Kolkata.

“India is set to become one of the largest markets in the world for digital services," notes Neeraj Bharadwaj, managing director of the Carlyle Asia Partners advisory team. "[And Bharti Airtel] is well positioned to leverage the potential growth of data centres in India.” 

"Rapid digitization has opened up a massive growth opportunity for data centres in India, and we plan to accelerate our investments to become a major player in this segment," says Gopal Vittal, Bharti Airtel’s managing director and CEO, India and South Asia. "We are delighted to have Carlyle as a strategic partner, particularly given their experience in this industry.”

Carlyle has prior experience in data centre ownership through investments in Coresite in the US and Itconic in Spain. Since 2000, the firm has built up local knowledge within India via a series of investments in SBI Life, SBI Card, HDFC, India Infoline, Delhivery, PNB Housing Finance and, more recently, Piramal Pharma and SeQuent Scientific. Carlyle has, as of March 31 2020,  invested more than US$2.5 billion in India.

Bharti Airtel-UK government satellite deal

In another Bharti Airtel-related deal, the UK government has teamed up with the Indian telecom to acquire bankrupt satellite operator OneWeb.

London-based OneWeb makes low-Earth-orbit satellites providing high-speed communications, and the UK government has a need for this technology because after Brexit it will no longer be a member of the European Union’s Galileo satellite system.

The UK government and Bharti Airtel unit Bharti Global will each invest around US$500 million in OneWeb.

The deal is subject to US court approval and regulatory clearances and is expected to close before the end of the year.

A statement from the UK department for Business, Energy and Industrial Strategy points out that the move signals the government’s ambition for the UK to be a pioneer in the research, development, manufacturing, and exploitation of novel satellite technologies through the ownership of a fleet of low-Earth-orbit satellites.

Noting that Bharti Global is part of a group that controls the third-largest mobile operator in the world, the statement adds that Bharti will provide the company commercial and operational leadership and bring OneWeb a revenue base that will contribute towards its future success.

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