Many Israeli real estate and communications developers are investing in Asia, including Fore Group (formerly Elgadcom) controlling shareholders, chairman and CEO Moshe Shoshan, Eli Shoshan, and Gad and Dov Sluk. One of the company's major holdings is TowerVision Ltd., which builds, operates, maintains, and manages cellular communications towers in India.
Sources inform ''Globes'' that TowerVision has raised $100 million in a private placement led by Morgan Stanley. In addition to serving as an underwriter, Morgan Stanley injected a third of the amount raised, with UBS AG (NYSE; SWX: UBS) and another international investor together providing another third, and three Israeli investors injecting $40 million. Migdal Capital Markets Ltd. was a secondary underwriter responsible for raising money from Israeli investors.
TowerVision raised the capital in the form of a mezzanine loan into its parent Indian company, which will make the private equity investment into the company. Under a new Indian law intended to protect local banks, loans from foreign soruces may not exceed $20 million, which is why TowerVision raised the money in this way.
TowerVision buys or builds cellular towers, which it leases in long-term contracts to Indian cellular operators. By owning the towers, the company can lease them to multiple tenants, thereby saving costs and shortening the time needed to expand cellular networks. The company has built almost 1,000 towers to date, making it an attractive investment target for Israeli and foreign investors.
Sources estimate that India will have 425-500 million cellular subscribers within two years, and 250,000 more cellular sites will be needed to service them. Twelve cellular operators currently operate in India, eight of which are national carriers and four are regional carriers. TowerVision has agreements with six of the national carriers.
TowerVision will use proceeds of the placement to build 6,000 cellular sites over the next two years, of which 2,500 sites will be built by year-end, and 2,500 more by the end of 2009. When one of these stages is completed, Fore Group is expected to float TowerVision on the Bombay Stock Exchange or on another Asian market. Fore Group has already floated on subsidiary, Leadcom Integrated Solutions Ltd. (AIM: LEAD).
Regardless of the private placement, TowerVision is also seeking a $200 million credit line from banks to finance the company's expansion. The company's controlling shareholders are reportedly trying to put together a financing package with Indian and foreign banks.
Published by Globes [online], Israel business news - www.globes-online.com - on February 4, 2008
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