Bharti Telecom Limited (BTL), the promoter company of Bharti Airtel, has raised Rs 8,433 crore ($1.15 billion) by selling a 2.75% stake in the telecom operator to a clutch of overseas investors such as Blackrock, Fidelity, Segantii Capital, Norges Bank and Key Square Capital, and local fund houses including HDFC Mutual Fund and SBI Mutual Fund.
“On the back of such a strong demand from international and domestic investors, the amount raised was increased to around $1.15 billion (compared with $1 billion initially planned),” Harjeet Kohli, group director, Bharti Enterprises, said in a statement on Tuesday.
Other overseas buyers include Jane Street and Marshall Wace, and local fund houses such as Birla Mutual Fund and Axis Mutual Fund, said a person aware of the matter.
“With the proceeds, BTL will become a zero-debt company, providing an even stronger financial flexibility and capacity to provide any additional shareholder support as may be desired by Bharti Airtel from time to time,” Kohli added.
The allocation was done to more than 50 accounts, with the top 10 getting two-thirds of overall allocation, BTL said in the statement.
The deal was announced after market hours. Bharti Airtel shares closed 5.71% lower on the Bombay Stock Exchange at Rs 559.15, after plunging 6% in intraday trade, in the run-up to the official deal announcement. The floor price of the sale was Rs 558 a share.
BTL’s stake in Bharti Airtel fell to around 36% after the deal. Correspondingly, the combined 58.98% holding of Bharti Airtel’s promoter group – Sunil Mittal-owned entities and Singtel – came down to 56.23%. Sunil Mittal’s Bharti Enterprises and Singtel own 50.56% and 49.44%, respectively, in BTL. In addition to BTL, the other promoter companies of Bharti Airtel are Indian Continent Investment Ltd, Viridian Ltd and Pastel Ltd.
The BTL stake sale also lowered the effective shareholding of Bharti Airtel’s promoter group entities, SingTel and the Mittal family, to under 32% from 33.3% and to about 24% from 25.7%, respectively. GIC of Singapore has a 2.79% stake in Bharti Airtel.
“Bharti Group and Singtel, as Bharti Airtel’s largest shareholders remain committed to the business and the long-term prospects of Bharti Airtel,” said the company. It said that in the past few years, the promoters had invested more than Rs 21,000 crore in Bharti Airtel and that they stayed fully committed to investing further in the business as may be required.
JP Morgan India was the sole agent for the secondary placement.
“BTL’s 2.75% stake sale in Airtel is mainly to de-lever its balance sheet as dividend payments from the telco are insufficient to service its Rs 8,500 crore debt,” brokerage Jeffries said in a note. It said a BTL stake sale in Bharti Airtel was inevitable as about Rs 6,800 crore of its debt is coming up for repayment in 2020-21.
BTL said the stake sale proceeds would be used to fully repay its debt, which was raised primarily to finance the acquisition of Bharti Airtel equity shares in the past – in 2016, 2017 and through the Rs 25,000-crore rights issue in March 2019. With BTL becoming a zero-debt company, Bharti Airtel’s credit profile too will be augmented as it would benefit from deleveraging on a consolidated basis including any debt of promoter holding company.
Despite the fall on Tuesday, Bharti Airtel shares have been among the outliers in a weak overall market amid the Covid-19 outbreak, on the back of strong fourth-quarter results of its India operations. Average revenue per user (ARPU) grew 14% during the quarter, backed by increasing 4G user additions and data consumption, said market experts.
The past few weeks have seen large fundraisings by Jio Platforms, the parent company of Bharti Airtel’s biggest rival, Reliance Jio Infocomm. The company has concluded deals to raise Rs 78,562 crore from a clutch of investors, including Facebook and private equity players Silver Lake, Vista Equity Partners, General Atlantic and KKR.
Source: Economic Times