BHARTI ZAIN BUYOUT-IT IS THIRD TIME LUCKY IN AFRICA

Mr. Bharti of Bharti Airtell that bought out Zain operations in Africa


(Reuters)

DEALS

"It's a winner-takes-all business," said Prahlad Shantigram, who heads the team at Standard Chartered (STAN.L) that helped Indian cellular firm Bharti Airtel (BRTI.BO) clinch a big acquisition in Africa at its third attempt.

Getting close doesn't count, as Bharti and its bankers found out the hard way after twice failing to seal a tie-up with South Africa's MTN (MTNJ.J) before this week signing a $9 billion purchase of most of Kuwait firm Zain's (ZAIN.KW) African operations.

"Most deals tend to take about as much time as childbirth. In this case, it's been like three births over two years," said Shantigram, global head of M&A advisory at Standard Chartered, which has advised Bharti throughout its efforts to become a major player in Africa's big-potential telecoms market.

For Shantigram, 44, the deal caps a relationship with Bharti and its billionaire chairman Sunil Mittal, that dates back to when the banker was at Merrill Lynch and helped the mobile carrier go public in 2002.

For Standard Chartered, which was joined by Barclays (BARC.L) in advising Bharti and is a relative newcomer to M&A, the deal plays to its strengths as a specialist lender in emerging markets, including India and Africa.

In addition to advising Bharti, Standard Chartered led the $8.5 billion financing package for India's mobile leader and committed the biggest single chunk of funding at $1.3 billion. The loan was priced aggressively, at under 200 basis points above Libor.

Barclays, also trying to build a fledgling M&A business, was the next biggest lender to the deal, pledging $900 million.

Swiss bank UBS (UBSN.VX) advised Zain.

NICHE PLAYER

Standard Chartered is a niche player in M&A, a business it only entered in late 2003. Shantigram, for example, heads global M&A for the bank but is based in Mumbai, not at headquarters in London.

The Bharti deal, the second-largest overseas acquisition by an Indian firm, pushes Standard Chartered up to 21st this year on the global M&A league tables, from 56th in 2009, according to Thomson Reuters data.

Goldman Sachs (GS.N) topped the global first quarter M&A league table, preliminary data show.

Standard Chartered, which also advised Bharti on its recent acquisition of Warid Telecom in Bangladesh, has been building its investment banking operations in Asia, its biggest market, taking on more established players.

It bought Cazenove Asia in 2008, beefing up its equity capital markets business in the region, and plans to begin equity underwriting later this year in India, joining a fiercely competitive marketplace.

Shantigram, born and raised in Mumbai and a graduate of the prestigious Indian Institute of Management at Ahmedabad in the western state of Gujarat, described his "day job" as running the bank's global M&A business.

"My night job is really dealing with transactions as and when they come along, where I have a personal relationship or things of that sort," he said in a phone interview.

AFRICAN ADVENTURE

Firming up a deal with a target whose operations are spread over 15 African countries presented plenty of challenges.

The Standard Chartered team for the Zain deal was about 9-strong, spread across India and Africa, most of them veterans from the MTN bids.

"I think the simple lesson in Africa is: whatever other rules of M&A that might apply in the rest of the world don't necessarily apply there, because it's a whole different ballgame," he said.

Africa has become an increasingly frequent target for expansion by overseas firms, especially from China and India.

"A lot of recent Indian acquisitions have been into relatively more stable jurisdictions, be it Europe or even certain parts of Asia, that are a lot more well researched and well understood relative to some of these countries in Africa," Shantigram said.

A heavy travel schedule limits Shantigram's outside interests to movies, reading and finding time to spend with his family.

He noted the Zain deal puts Bharti into just 15 of Africa's 53 countries.

"It's at best a stepping stone to much larger ambition, I would say," he said. "I'm sure we will do a lot more with Bharti in Africa."

(Editing by Ian Geoghegan)