Bharti Telecom Sells 2.75% Stake In Airtel For Rs 8,433 Crore
Signage for Bharti Airtel is displayed atop one of the company’s stores in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Bharti Telecom Sells 2.75% Stake In Airtel For Rs 8,433 Crore

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

As many as 150 million shares, equivalent to 2.75% stake, were sold at Rs 558 apiece.

The promoter entity will use the proceeds of the stake sale to pare debt and become a “debt-free company”, it said. Bharti Group and Singapore Telecommunications Ltd. will continue to hold a majority stake in Bharti Airtel at 56.23% after the transaction.

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

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

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 the Top 10 getting two-thirds of shares on offer.

With Bharti Telecom 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,” the statement read. “In the last few years promoters have invested over Rs 21,000 crore in Bharti Airtel and stay fully committed to investing further in the business as may be required.”

Analyst Take

In a note Monday, Credit Suisse AG said the equity stake sale is more of a deleveraging exercise and the sector fundamental remains attractive. It expects Bharti Airtel to benefit from ongoing market repair in the sector.

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

On Tuesday, Bharti Airtel shares fell 5.71% to Rs 559.15 apiece on the Bombay Stock Exchange while the benchmark Sensex shed 0.21% to end the day at 30,609.30 points.

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