India’s largest telecom company Bharti Airtel will sell 5 per cent stake to Doha-based Qatar Foundation Endowment (QFE) for around Rs 6,800 crore ($1.26 billion) by issuing over 199.87 million new shares at a price of Rs 340 apiece, 7.3 per cent higher than Thursday’s closing price.
“...It has entered into a binding agreement with Qatar Foundation Endowment (QFE), under which Bharti will issue 199,870,006 of its new shares to QFE, representing a shareholding of 5 per cent in the company, post issuance of the new shares,” Bharti Airtel said in a statement.
As a result of the deal, the promoter shareholding in the company may come down marginally. According to BSE data, promoters together held nearly 68.55 per cent stake in Bharti Airtel, including 45.75 per cent by Bharti Telecom, as on March 2013.
Bharti Airtel is jointly promoted by Singapore-based Singtel and group companies of billionaire Sunil Mittal’s family. As per the agreement, QFE will subscribe to 199,870,006 new shares of Bharti at a price of Rs 340 per share, amounting to a total consideration of USD 1.26 billion (Rs 6,796 crore), it added.
“I am delighted to welcome another high quality long-term institutional investor to our shareholder base...This agreement exemplifies further strengthening of the already deep economic and cultural relations between Qatar and India,” Bharti Chairman Sunil Bharti Mittal said in the statement.
The investment will further strengthen the capital structure and provide further flexibility for the company to deliver on its growth strategy, the statement said.
Goldman Sachs acted as the sole financial advisor to QFE on this investment. “As a long-term global investor, our shareholding gives us exposure to a high growth sector in key emerging markets. QFE looks forward to supporting Bharti in realising the full potential of this world class business,” QFE Acting Chief Executive Officer Rashid Al-Naimi said.
QFE is a long-term global investor with a broad mandate to make direct and managed investments, the statement said. The stocks of Airtel, which tanked nearly 1 per cent on Thursday on account of poor results, closed at Rs 317.70 a piece, up 0.32 per cent on BSE today.
For the 2012-13 fiscal, Bharti made Rs 2,275.7 crore profit, its smallest in seven years. The net profit was 46.6 per cent lower than Rs 4,259.4 crore in 2011-12.
Airtel has a net debt of Rs 63,839.5 crore as on March 31, 2013. The company has recently raised $1.5 billion through overseas bonds mostly to pay off high interest loans and fund capex needs.