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MUMBAI, Dec. 5

AIG Asian Infrastructure Fund would exercise the option to exit from its investee companies such as Idea Cellular, BPL Telecommunications and Spice, should the exit option be offered to it by these companies at a price based on the valuation at which they decide to merge with other companies.

``The fund would be happy to exit at the valuations at which mergers have happened, and we are very much in favour of consolidation in the telecom industry,'' said Mr Pho-Ba Quan, CEO, Emerging Markets Partnership, AIG Asian Infrastructure Fund, which has invested $150 million in the Indian telecom industry, all in the GSM cellular space.

``Since the merged entities have been valued at higher than the individual entities which have merged, we would naturally get more than we have put in, if we exited at those levels,'' he said, speaking on the sidelines of an Asian Venture Capital conference here.

Mr Quan clarified that this does not indicate the fund's loss of interest in its investee companies.

``But as pure financial investors, we always look forward to a good exit option where we can book profits. After all, our investments were made in 1995-1996.''

The fund, which has roughly 1.6 per cent in Idea Cellular (it earlier had a stake in Tata Cellular which reduced after the Tata-Birla-AT&T merger), 17 per cent in BPL Communications and 22 per cent in Spice, has $150 million invested in India — all of this in the telecom sector.

Its entire investments in India are in GSM cellular companies, made during the times when the companies paid huge licence fees, said Mr Quan.

``It appears that constant policy and regulatory changes do not give the early investor the early bird advantage.''

He noted that in the beginning, only two mobile operators were allowed in one circle. Subsequently, four were allowed, and now, with the entry of limited mobility services, mobile telephony in India had many players.

``There has to be a clear regulatory framework,'' he said. According to him, the market can support around four or five large telecom players, which has invested $ 150 million in the Indian telecom sector, would exercise the option to exit from many of its investments, should an exit be available.

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