Bharti AirtelNSE -0.36 % plans to raise about $1 billion from the sale of atleast a 25% stake in its Africa subsidiary that will be listed on the London Stock Exchange. It plans to use the money raised to reduce debt and compete with Reliance Jio Infocomm in the Indian market.
“Immediately following admission (in the London Stock Exchange), the company intends to have a free float of at least 25% of the company’s issued share capital and expects that it would be eligible for inclusion in the FTSE UK indices,” the company said in a release on Tuesday. “In addition, it is expected that up to a further 15% of the offer will be made available pursuant to the over-allotment option.”
People familiar with the matter said Bharti Airtel expects to raise over $1 billion from the initial public offer (IPO), valuing the company at over $4 billion. Airtel has already raised $1.45 billion via pre-IPO placements to seven investors.
PLANNING TO LIST IN NIGERIA TOO
This helped cut net debt in the Africa business to $4 billion at the end of March from $7.8 billion a year back, analysts said.
The company had initially expected to raise $1.25 billion from the IPO, experts said. In January, Airtel’s Africa unit raised $200 million by selling a stake of about 4.37% to Qatar Investment Authority at a valuation of $4.58 billion. Before that, it sold about 25% to six investors including Warburg Pincus, Temasek, Singtel and SoftBank Group International, raising $1.25 billion, valuing the company at $5 billion.
Shares of Bharti Airtel, of which Singtel owns over 35% after the recent rights issue, ended 1.24% lower at Rs345.65 on BSE on Tuesday.
“Since first investing in Africa almost nine years ago, we have well leveraged our expertise in emerging markets to deliver on a clearly-defined strategy to build Airtel Africa into a market-leading mobile service provider, increasingly expanding beyond voice into data services and Airtel Money,” Airtel Africa chairman Sunil Mittal said in the IPO document.
He added that recent investments will put Airtel Africa in a strong position to build its own capital market profile.
Bharti Airtel is also considering a plan to list the unit’s shares on the Nigerian Stock Exchange. “If the company decides to proceed with a listing on the Nigerian Stock Exchange, the earliest that will happen will be at the time of admission (to the London Stock Exchange),” it said.
“Operating with an asset-light model, the company has improved financial performance, through sustainable revenue growth in voice, data and mobile money, significantly improved ebitda (earnings before interest, taxes, depreciation, and amortisation) margin with strong free cash flow generation,” said Raghunath Mandava, CEO of Airtel Africa. “Airtel Africa’s mobile payments business — Airtel Money — is the fastest growing business for the company.”
Bharti Airtel is facing pressure on revenue and profitability at home owing to intense competition triggered by the entry of Reliance Jio Infocomm. The company is trying to build a war chest to fund its 4G network expansion across the country. It has also been selling stakes in tower unit Bharti Infratel, and plans to sell another 32% in that company. It has also raised Rs 25,000 crore through a rights issue and Rs7,000 crore via a bond issue.
JPMorgan, Citigroup Inc, BofA Merrill Lynch, Absa Group Ltd, Barclays Bank Plc, HSBC, BNP Paribas, Goldman Sachs International and Standard Bank Group Ltd have been appointed as advisers.
