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Princeton Growth secures up to $300 million backing from Warburg Pincus

LiveMint logoLiveMint 06-06-2017 Swaraj Singh Dhanjal

Mumbai: Princeton Growth Ventures, founded by former Tata Communications Ltd senior executive Rangu Salgame, on Tuesday said it had obtained backing of up to $300 million from American private equity firm Warburg Pincus.

Salgame, who once headed Cisco Systems’ operations in India, has also worked for Verizon Communications. His most recent role was that of chief executive of the Growth Ventures Group at Tata Communications, where he ran a global multi-billion dollar portfolio for the company and was also responsible for the data centre business.

Princeton GV will use the funds to create a new global telecommunications, media and technology (TMT) infrastructure platform, with a particular focus on data centres and fast growing digital media services.

“We are looking at both emerging markets as well as developed ones to acquire assets in disruptive technologies such as cloud, mobile and video distribution. These technologies are fundamentally changing the way internet infrastructure has to be deployed,” said Salgame, chairman and chief executive at Princeton.

The company will acquire stand-alone as well as carve-out assets in India, China, Southeast Asia, West Asia and Latin America.

“One of the approaches to acquiring assets will be to work with large media and telecom companies to carve out underperforming or underinvested assets. Globally, in the telecom market, around $500 billion is invested every year. Even if we consider that a fraction of it, say 5-10%, of that capital is inefficiently deployed, that’s a large addressable market from which we can pick out underperforming companies and build a global platform,” said Salgame.

The cloud market is itself worth over $30 billion globally, while the video market, from broadcasting to online video, is a $50 billion plus market, Salgame added.

Princeton GV has a pipeline of assets that it is looking to acquire and the first asset acquisition could be in the range of $500 million to $1 billion, said Salgame.

India will constitute an important part of the overall portfolio of Princeton GV, he added.

Adoption of mobile, cloud and video is driving significant need for internet infrastructure in emerging markets, creating opportunity for platforms like Princeton GV.

“In mobile, there has been a phenomenal growth in emerging markets, but we still have billions of people yet to come online through this platform. And that growth will drive the need for good internet infrastructure in these countries,” said Salgame.

The cloud market, both public and private cloud, too is still at a very early stage in the emerging markets like India and China, he said.

“The cloud market is expected to become a very attractive market in (the) next 5-10 years as it penetrates corporates. That migration will drive need for downstream infrastructure such as data centre, fiber and networks,” said Salgame, adding that the cloud market was growing in double digits even in developed countries like the US and hence it was a big opportunity.

The need of video content companies to have infrastructure that allows them to provide users flexible options such as pay-as-you-go and effective content delivery on mobile and other devices, is also a big driver of infra demand, both in developed and developing markets.

Warburg Pincus has been investing heavily in the TMT sector globally for more than 25 years.

Since inception, the firm has invested over $16 billion in more than 300 TMT companies across company life-stages and geographies, in sectors including telecommunications, software, technology enabled-services, media, information and internet.

“We see a significant opportunity in the creation of a new platform to meet the growing needs for data centers and digital cloud services across emerging market regions, and we are excited to partner with Rangu and the Princeton GV team on this venture,” said Chandler Reedy, managing director at Warburg Pincus.

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