Bharti Telecom, the promoter firm of Bharti Airtel, on Tuesday raised over ₹8,433 crore by selling 2.75% stake in the mobile services provider in the secondary market.
“The sale proceeds will be utilised to fully repay debt at Bharti Telecom Limited, which was raised primarily to finance the acquisition of Bharti Airtel equity shares in the past, and make the promoter holding company a debt-free company,” the company said in a statement.
It added that with Bharti Telecom becoming a zero-debt company, Bharti Airtel’s credit profile would also be augmented as it would stand to benefit from deleveraging on a consolidated basis, including any debt of the promoter holding company.
Bharti Group and Singtel will continue to own a majority stake in Bharti Airtel at 56.23% even after the transaction and as the largest shareholders, they ‘remain committed to the business and long term prospects of Bharti Airtel’, it said.
Harjeet Kohli, group director, Bharti Enterprises, said, “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. 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.”
As per Jefferies India, the move by Bharti Telecom is mainly to de-leverage its balance sheet as the dividend payments from Bharti Airtel are insufficient to service its debt of ₹85 billion. “The stake sale will lower Singtel and promoters' effective stake in Bharti Airtel to 32% and 24% respectively,” it added. The stake sale was made to institutional investors through an accelerated book building process in the secondary market. The company said the allocation was done to over 50 accounts with the top 10 getting two-thirds of the overall allocation. The total sale proceeds of over ₹8,433 crore ($1.15 billion) was over-subscribed multiple times with a healthy mix of all categories of investors and hedge fund investors in India, Asia, Europe and the U.S.
