Sebi asks Bharti to clarify on promoter stake hike

The Securities and Exchange Board of India (Sebi) has sought clarifications from telecom services major Bharti Airtel for increasing the promoter’s stake in the company by way of creeping acquisitions and without making public announcements.

Sebi said the shareholding of the promoter group increased to 67.03 per cent as on September 30, 2008, from 60.91 per cent as on June 30, 2007. The increase happened on account of acquisition of shares by one of the promoter group entity — Indian Continent Investment Ltd (ICIL) — in several tranches.

According to Sebi regulations, an acquirer who holds 55 per cent or more but less than 75 per cent of the shares of voting rights in a target company cannot acquire additional shares without making a public announcement. The announcement should be followed by an open offer to acquire a minimum of 20 per cent stake at a minimum stipulated price.

Bharti Telecom, Pastel Ltd (a Singapore government-owned company) and ICIL constitute the promoter group of Bharti Airtel.

Bharti Telecom and Pastel formed part of the promoter group till June 2007. Thus, these two companies jointly exercised control on Bharti Airtel and were persons acting in concert, Sebi said.

When contacted, a Bharti spokesperson said in a statement that “Sebi has sought details on the factual position, which we will provide shortly.”

ICIL, a Bharti group company, acquired 4.99 per cent in Bharti Airtel in FY 2007-08 and 1.28 per cent in FY 2008-09.

“Both these transactions have been undertaken during two different financial years and are well within the creeping acquisition limit of 5 per cent in each financial year as permitted under the takeover regulations. Therefore, there is no question of breach of any takeover regulation. We have also filed the requisite declarations to the stock exchanges on all these transactions in time,” said the spokesperson.

“We would also like to clarify that while Pastel is classified as a “deemed promoter”, it is not ‘a person acting in concert’ with the Bharti group. Therefore, the shareholding of Pastel and the Bharti group cannot be aggregated while determining the creeping acquisition limit,” he said.