Bharti Airtel’s Africa arm has raised $1.25 billion (₹9,200 crore) by completing a placement of shares with six global investors in the run-up to its initial public offering (IPO), which is likely to take place in May-June 2019, people familiar with the matter said. The IPO plan appears to have been delayed by a few months, which analysts said was because of market volatility.
The two-stage fund-raising exercise is aimed at reducing the Sunil Mittal-led telco’s consolidated debt of $15 billion and freeing up cash to fight Reliance Jio Infocomm in its home market. Bharti Airtel shares ended at₹302.45 on the BSE Friday, up 3.3%.
Airtel Africa has also constituted an eight-member board ahead of its IPO, widely expected to take place in London. “The formation of the company board follows successful primary equity issuance of $1.25 billion to six leading global investors comprising Warburg Pincus, Temasek, Singtel, SoftBank Group International and others ahead of an intended IPO on an international stock exchange,” Airtel Africa said in release on Friday.
Airtel Africa said the board has representatives from parent and global investors. It includes “Sunil Bharti Mittal, Raghunath Mandava, Akhil Gupta, Vishal Mahadevia, Alok Sama, Arthur Lang, Shravin Bharti Mittal and Richard Gubbins.”
In a separate BSE filing, Bharti Airtel confirmed “receipt of full issue proceeds and completion of the said primary equity issuance to leading global investors by Airtel Africa.” After the pre-IPO issue, Bharti Airtel’s stake in its Africa unit will dip to around 72%, according to brokerage CLSA.
The IPO, through which Airtel Africa may raise a similar amount as pre-IPO sale, appears to have been delayed. While the company hasn’t given an official timeline, it was widely expected in the March quarter of 2019. Analysts attributed this delay to the volatility in the global equity markets, which has delayed offers by others as well.
“Airtel Africa is likely to take a call on the IPO timing once markets are more stable,” said Nitin Soni, director, corporates, at global rating agency Fitch.
Airtel Africa though has said that the IPO plans are on track.
Company officials and industry experts said that the Tanzanian government’s reported opposition to the share sale, fearing a dilution of its stake, isn’t much of a concern. The Tanzanian government, which is a 40% stakeholder in Airtel Tanzania, has reportedly opposed the share divestment, since it was not involved in the decisionmaking.
The reported grievances “have been triggered by a misunderstanding on the issue of the Tanzanian government’s stake post the share sales,” said a person with knowledge of the matter. “That is bound to get cleared up soon as Airtel Africa has clearly said that the placement of shares will not involve any sale or dilution of shares by existing shareholders.”
Airtel said it has not sold any shares in its Africa unit and that Airtel Tanzania will continue to be held by the country’s government and Bharti Airtel Tanzania BV.
“We are in dialogue with the government of Tanzania for additional clarifications,” Airtel added.
The latest developments come amid Airtel Africa’s strong showing in the September quarter. Africa net income, before exceptional items, swung to ₹232.3 crore from a net loss of ₹207.9 crore a year ago while total revenue rose nearly 13% to ₹5,647.2 crore.
Source: Economic Times