Bharti Airtel's African arm to raise at least $750 million through IPO

Bharti Airtel on Tuesday said its Africa subsidiary Airtel Africa would raise at least $750 million (around Rs 5,189 crore) through an initial public offering (IPO). 

The IPO is expected to be listed on the London Stock Exchange and the Nigeria Stock Exchange this calendar year.

“The offer is targeted to raise $750 million (plus a primary greenshoe option of up to 15 per cent) and will be used to reduce net debt,” Bharti Airtel said in a regulatory filing.

The green shoe option is a special provision in the underwriting agreement that allows the underwriter to sell more shares to the investors than what was planned by the issuer in the IPO.

It added that Airtel Africa intends to proceed with an IPO for admission and listing of its shares on the main market of the London Stock Exchange (premium segment).

It is learnt that after the IPO and a green shoe option of 15 per cent, Airtel Africa’s overall equity valuation would be 5.5-6 billion and the dual listing of the company’s shares on the two bourses will take place this year.

The telecom operator last year raised $1.25 billion from six global investors, including SoftBank Group Corp, Warburg Pincus LLC and Temasek Holdings (Private) Ltd.

At present, Airtel is the second largest operator in Africa with a customer base of about 94 million in 14 countries of the continent, including Nigeria, Chad, Gabon, Madagascar, Kenya, Tanzania, Uganda, Zambia and Rwanda, among others.

Airtel’s Africa focus can be gauged from the announcement it made in December 2017, when the company said its subsidiary Airtel Rwanda would acquire 100 per cent stake in Tigo Rwanda under a definitive agreement with Millicom International Cellular.

The company said it would consolidate its position as the market leader or emerge the second player in the 14 African nations where the company has a presence through inorganic growth.

Airtel’s Africa operations reported a net profit at $83 million for the quarter ended March 31, 2019, mainly on account of more users in its Airtel Money platform and higher data consumption. It had posted a net loss of $49 million in the corresponding period last year.

The company reported a nearly 16 per cent year-on-year increase in earnings before interest, tax, depreciation and amortisation (Ebitda) to $354 million.