Bharti Infratel share sale fetches Rs 2,140 cr

Offer for sale for 4.5% divestment subscribed 1.27 times

Bharti Airtel, India’s largest telecom operator, on Thursday raised Rs 2,140 crore by selling 4.5 per cent stake in Bharti Infratel, its tower arm. The share sale saw substantial demand from investors, helping the company exercise the greenshoe option (selling investors more shares than initially planned).

Bharti Airtel had put 45 million shares on the block, with an option to offer 45 million additional shares, at a floor price of Rs 250 a share. The offering saw total bids of 107 million, at a tentative price of Rs 252 a share, according to stock exchange data.

The Bharti Infratel stock, however, came under heavy selling pressure on account of a fresh supply of shares into the market. Shares of the telecom tower operator closed at Rs 253 on BSE, down 6.6 per cent, while those of Bharti Airtel closed at Rs 366, down 0.4 per cent. Bank of America Merill Lynch, JP Morgan and UBS Securities managed the share sale.

The sale was aimed at increasing the company’s public float to meet the regulatory requirement of at least 25 per cent public shareholding. Following the stake sale, Bharti Airtel’s stake in Bharti Infratel will fall from 79.4 per cent to 75 per cent.

The deadline to meet the public shareholding norm for listed companies was June last year. Bharti Infratel, which came out with an initial public offering (IPO) in December 2012, could meet the norm within three years from the date of its public issue, according to regulations.

Investment bankers said Bharti Airtel might have decided to go ahead with the disinvestment early to help cut debt. Also, conditions are favourable for fund-raising, following a surge in the market. In the past three months, Indian companies and investors have raised about Rs 23,000 crore through share sales in listed companies.

In December 2012, Bharti Infratel had raised about Rs 4,100 crore through an IPO, selling shares at Rs 220 apiece.

According to a Bloomberg consensus estimate, the 12-month price target on the stock is Rs 275. In a recent report, JPMorgan had said the company offered “attractive cash flow growth prospects” and traded at a sharp discount to its US and Indonesian peers. The brokerage has set a price target of Rs 280 for the company.