TPG Capital and former LightSquared Inc. Chief Executive Officer Sanjiv Ahuja are teaming up on a telecommunications venture in Myanmar, the first foray by a big-name U.S. private-equity firm in the country since it emerged from military rule three years ago.
The growth-equity unit of Fort Worth, Texas-based TPG invested about $40 million this month in Apollo Towers Myanmar Ltd., said a person briefed on the matter, who asked for anonymity because the transaction was private. The money will help Apollo, which is owned by a Singapore-based company Ahuja started last year, build about 1,000 mobile-phone towers across Myanmar this year.
Foreign investment in the former Burma’s real estate has increased since Western governments eased sanctions starting in 2012. Corporate private-equity deals remain rare in the Southeast Asian country of 60 million, which has set out to modernize and regulate its economy since President Thein Sein took over in 2011. Large U.S. firms such as Blackstone Group LP (BX:US), KKR & Co. and Carlyle Group LP (CG:US) have held off from investing in the country.
“There are very few countries left in this world where mobile telecom infrastructure does not exist or is so sparse and basic like it is in Myanmar,” Ahuja said this week in a telephone interview from Yangon. “This is a society which is opening up and beginning to connect with the rest of the world. There is an insatiable need for mobile connectivity.”
Lisa Baker, a spokeswoman for TPG at Owen Blicksilver Public Relations Inc., declined to comment on the investment. Ahuja confirmed that he’s working with TPG on the venture while declining to disclose terms.
Ahuja, 57, an Indian-born entrepreneur who has backed tower startups in Bangladesh, Pakistan and Africa since 2007, called the Myanmar venture a “once-in-a-several-decade opportunity.”
He resigned as CEO of LightSquared, a Reston, Virginia-based wireless venture, in 2012 shortly before it filed for bankruptcy after the U.S. government blocked its service, saying it might interfere with civilian and military frequencies. Hedge-fund manager Philip Falcone, who in 2013 agreed to be banned from the securities industry for five years over misdeeds unrelated to the wireless company, is LightSquared’s controlling shareholder.
Less than 10 percent of Myanmar’s population has mobile service, according to Ahuja. That compares with more than 60 percent of the citizens in Bangladesh, a country with comparable per-capita income.
Apollo is the only tower owner to be given a government operating license to date, according to Ahuja. Three other approvals are pending. Ahuja estimated that as many as 20,000 towers will go up in Myanmar in the next few years, at a cost of $100,000 apiece, or $2 billion. He expects Apollo to build and own several thousand of them.
In December, Apollo signed an agreement with a unit of Fornebu, Norway-based wireless-service giant Telenor ASA (TEL) to operate its towers as Telenor moves into Myanmar.
Myanmar’s economy may quadruple to about $200 billion by 2030 if the nation invests more in technology, according to a report last year by the McKinsey Global Institute. Real growth in gross domestic product will be about 7.8 percent this year and next, the International Monetary Fund estimates.
TPG was an early investor in Russia, Thailand and Indonesia. In May 2012, co-founder David Bonderman met with Myanmar government officials, opposition leader Aung San Suu Kyi and business executives in Yangon to size up the investment and political climate. TPG’s growth-equity unit, TPG Growth, oversees about $3.7 billion of the firm’s more than $59 billion of total capital.