Airtel Africa To Offer Shares At 15% Discount In IPO
Bharti Airtel will offer shares in the Airtel Africa IPO in a price range of 80-100 pence.
Bharti Airtel Ltd. will sell shares of its Africa unit in the planned initial public offering in London at a discount to its previous fundraising.
India’s second-largest wireless carrier has set the Airtel Africa IPO price at 80-100 pence per share, according to its filing with the London Stock Exchange. The upper end of the price translates to $1.26 per share, a discount of 15 percent to the price at which Airtel Africa previously raised funds from investors, BloombergQuint’s calculations showed.
Airtel Africa raised close to $1.25 billion from six investors in October and $200 million from Qatar Investment Authority in January this year. In both cases, the funds were raised at $1.48 per share.
In this maiden offer, the company is offering 595.2-744 million new shares. It plans to raise close to $750 million. The entire proceeds will be used to repay the debt of the African unit. After listing, the leverage ratio, or net Debt-to-Ebitda, of Airtel Africa would fall to 2.4 times, according to BloombergQuint’s calculations.
Assuming that all the proceeds are used to repay debt, the price range pegs the equity value of Airtel Africa at $3.8-4.6 billion and the enterprise value at $7-7.8 billion. That implies an enterprise value-to-ebitda at 5.3-5.9 times. In comparison, MTN Group—a leading African telecom company—trades at 5 times its FY20 EV/Ebitda, and Vodacom Group trades at 7.4 times, Bloomberg data showed.
The final price of the Airtel Africa IPO is expected to be announced on or around June 28.
Also, Airtel plans to list its Africa unit on the Nigerian Stock Exchange, the filing said. It’s in the process of seeking relevant approvals from the Nigerian Securities and Exchange Commission and the bourse.
The Sunil Mittal-owned company is fighting a costly tariff war with Reliance Jio Infocomm Ltd. Airtel’s profitability and revenue shrunk and debt soared after the telecom operator led by billionaire Mukesh Ambani started operations in 2016 by offering cheaper data. Bharti Airtel resorted to some asset sales and rights issue, besides the Africa IPO, to bolster its finances.