Bharti Telecom sells 2.75 per cent stake in Airtel for Rs 8,433 crore to institutional investors

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Promoter firm Bharti Telecom has sold 2.75 per cent stake in Airtel to institutional investors in the secondary market, raising over Rs 8,433 crore, the company said on Tuesday.

The sale proceeds will be fully utilised to repay debt at Bharti Telecom and will make the promoter holding firm a 'debt free company', it said.

Bharti Group and Singtel will continue to hold a majority stake in Bharti Airtel at 56.23 per cent after the transaction, the company added.

The shares were sold at Rs 558 apiece and banking sources said that the list of institutional buyers included Blackrock, Norges Bank, Axis MF, HDFC MF, Birla MF, SBI MF, Segantii, and Marshall Wace.

The shares of Bharti Airtel closed at Rs 559.15 apiece on the BSE on Tuesday, about 5.7 per cent lower than the previous close.

Announcing the closure of secondary block placement of Airtel shares, Bharti Telecom said the issue was over-subscribed multiple times with healthy mix of all categories of investors, long only and hedge fund investors across geographies in India, Asia, Europe and the US.

"Bharti Telecom Limited, the promoter company of Bharti Airtel Limited have today sold 2.75 per cent stake in Bharti Airtel to institutional investors through an accelerated book building process in the secondary market," it said.

Bharti Telecom has raised over Rs 8,433 crores (or about USD 1.15 billion) through accelerated book-build offering of equity shares of Bharti Airtel, it added.

The stake sale was anchored by several existing as well as new shareholders, marquee global mutual fund complexes, sovereign wealth funds, multi-strategy funds and domestic institutional investors in sizable quantities, the company said.

The allocation was done to over 50 accounts with top 10 getting two-thirds of overall allocation.

With Bharti Telecom Limited becoming a zero debt company, Bharti Airtel's credit profile will also be augmented as it will stand to benefit from deleveraging on a consolidated basis, including any debt of promoter holding company.

"Bharti Group and Singtel, as Bharti Airtel's largest shareholders remain committed to the business and the long term prospects of Bharti Airtel. In the last few years the promoters have invested over Rs 21,000 crores (over USD 3 billion) in Bharti Airtel and stay fully committed to investing further in the business as may be required," the company said in a statement.

"The strong and wide response received from a diverse mix of investors across geographies, even during challenging global macro-economic conditions, clearly demonstrates the competitive strength and the long term prospects of Bharti Airtel," Bharti Enterprises Group Director Harjeet Kohli said.

On the back of strong demand from international and domestic investors, the amount raised was increased to about USD 1.15 billion, he said.

"With the proceeds, Bharti Telecom Limited 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 said.

In a note on Monday, Credit Suisse said the secondary equity sale by promoter company Bharti Telecom in Airtel is more of a deleveraging exercise and the sector fundamental remains attractive.

It added that it expects Bharti Airtel to benefit from ongoing market repair in the sector.

"Post the sale, promoter group's shareholding (through all entities) will decline from 59 per cent to 56.2 per cent. Effective stakes of Singtel in Bharti Airtel will decline from 33.3 per cent to 31.9 per cent and for Mittal family from 25.7 per cent to 24.3 per cent," the note had said.

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