Bharti Airtel block deal: Now, Sunil Mittal’s telecom group looks to go debt-free after Mukesh Ambani’s RIL

Bharti Airtel’s promoter firm Bharti Telecom raised Rs 8,433 crore on Tuesday, selling 2.75% stake in the telecom major to institutional investors through an accelerated book building process in the secondary market.

Bharti Airtel’s promoter firm Bharti Telecom raised Rs 8,433 crore on Tuesday, selling 2.75% stake in the telecom major to institutional investors through an accelerated book building process in the secondary market. With this the Sunil Bharti Mittal led-Bharti Airtel’s promoters are ostensibly looking to go ‘debt free’, a path similar to the one chosen by Reliance Industries’ Mukesh Ambani. Bharti Airtel share price traded flat on the BSE on Wednesday. After the sale, the promoter group will continue to own 56.23% in the company.

Bharti Airtel said the sale was oversubscribed multiple times by a 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 (US). According to data available on the BSE, Societe Generale picked up 3.53 crore shares at Rs 561.10 per share. “The stake sale was anchored by several existing and new shareholders and several marquee Global Mutual Fund complexes, Sovereign Wealth Funds, Multi-strategy funds and Domestic institutional investors in sizable quantities,” Bharti Airtel said in a statement.

The strong and wide response received from a diverse mix of investors across geographies, even during challenging global macroeconomic conditions, clearly demonstrates the competitive strength and the long term prospects of Bharti Airtel, Harjeet Kohli, Group Director, Bharti Enterprises, said. “On the back of such strong demand from international and domestic investors, the amount raised was increased to USD ~ 1.15 Billion. 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,” Harjeet Kohli added. 

As Bharti Telecom looks to fully repay the debt that was raised to primarily finance the acquisition of Bharti Airtel equity shares in the past, the telecom giant’s credit profile will also be augmented as it will stand to benefit from deleveraging on a consolidated basis including any debt of the promoter holding company.