Airtel Africa Lists At 6% Discount On London Stock Exchange
After selling shares in an initial public offering to pare debt, Airtel Africa Plc., the African arm of Bharti Airtel Ltd., listed today on the London Stock Exchange at a discount.
Shares of the Africa unit opened at 75 pence apiece on its first day of trading, 6.25 percent lower than its issue price of 80 pence per share ($1.01 per share), according to data on Bloomberg.
The company had raised nearly $750 million from the primary market by issuing new shares. Proceeds will be used by the company to pare debt. The leverage ratio of Airtel Africa—the continent’s second-largest mobile operator behind Johannesburg-based MTN Group Ltd., with almost 100 million subscribers across 14 countries, including Nigeria, Kenya and Tanzania—would fall to 2.4 times after listing, according to BloombergQuint’s calculations.
The IPO came as Bharti Airtel, owned by billionaire Sunil Mittal, is fighting a costly tariff war with billionaire Mukesh Ambani’s Reliance Jio Infocomm Ltd., which initially offered free data plans followed by dirt-cheap tariffs. With its profitability and revenue shrinking and debt rising, Bharti Airtel resorted to asset sales and rights issue, besides the Africa IPO, to bolster its finances.
The IPO issue price of 80 pence, or $1.01, was a sharp 32 percent discount compared with the earlier rounds of fund raising. Airtel Africa had earlier raised close to $1.25 billion from six investors in October and $200 million from Qatar Investment Authority in January. In both the instances, funds were raised at a valuation of $1.48 per share.
According to Jefferies, the pricing implies a trailing enterprise value to Ebitda ratio of 5.3 times, which is well below the 7.4 times in its previous round and also its peers at 5.6-7.6 times. The IPO, at these prices, will then not lead to any value unlocking, it said.