NEW DELHI: Bharti Telecom Limited has sold 2.75 per cent stake in Bharti Airtel to institutional investors for Rs 8,433 crore through book building process in the secondary market. The telecom giant said on Tuesday that the proceeds would be used to turn the company debt free.“The sale proceeds of over Rs 8433 crore ($1.15 billion) 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 United States of America,” the company said.
Bharti Group and Singtel, who form the promoter group, will continue to own a majority stake in Bharti
Airtel at 56.23 per cent, after the stake sale. “With the proceeds, Bharti Telecom Limited will become a zero debt company,” Harjeet Kohli, Group Director, Bharti Enterprises, said.
J.P. Morgan India Private Limited acted as the sole placement agent. “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 crore in Airtel and stay committed to investing further in the business as may be required,” said Bharti Telecom.
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Analysts described the exercise as a deleveraging move. “Secondary equity sale by Bharti Telecom is more of a deleveraging exercise, in our view — sector fundamental remains attractive,” noted Credit Suisse.
A separate report by the analyst firm Jefferies stated that though a stake sale by promoters is usually seen as negative by investors, in this case the stake sale was mainly to de-leverage Bharti Telecom and, hence, not “it is not negative.”