Bharti Infratel Ltd, the telecom tower arm of Bharti Airtel Ltd, India’s largest telecom services company, priced its initial public offering (IPO) near the lower end of the price band, following tepid response from investors.
The company on Monday said it had fixed the issue price at Rs 220 a share for institutional and high net worth individuals (HNIs) and Rs 210 a share for retail investors. The price band for the Bharti Infratel book building offer was between Rs 210 and Rs 240 per share.
The IPO was subscribed just 1.3 times. The issue largely saw participation from foreign investors, while domestic institutions, retail investors and HNIs gave it a miss. The qualified institutional investor (QIB) portion was subscribed 2.84 times. Both the non-institutional investor, or HNI category, and the retail investor segment remained undersubscribed 29 per cent and 19 per cent, respectively.
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A day before its IPO, the company had raised about Rs 651 crore from anchor investors by selling 28.34 million shares at Rs 230 apiece. Anchor investors included Sundaram Mutual Fund, Morgan Stanley, Citigroup and Alliance Bernstein.
Bharti Infratel has raised about Rs 4,118 crore from its public issue, including Rs 651 crore from anchor investors. The company, at the issue price of Rs 220 per share, will command a market capitalisation of approximately Rs 41,560 crore.
The IPO, biggest since Coal India Ltd's public issue in October 2010, comprised 146 million fresh shares and 42.6 million secondary sale from existing shareholders. Four of its private equity investors, including arms of Temasek and Goldman Sachs, were the selling shareholders.
Meanwhile, the parent Bharti Airtel, which owned 86 per cent in the company before the IPO, didn't sell any shares through the IPO.
Shares of Bharti Airtel on Monday ended 3.69 per cent lower at Rs 300.45 per share on BSE, while the Sensex, the benchmark index, shed 0.38 per cent to close at 19,244.42 points.
The IPO price range valued Bharti Infratel at 45 to 50 times its 2013-14 expected earnings and at 10 to 12 times on enterprise value/earnings before interest, taxes, depreciation and amortisation (EV/Ebitda) basis. On the valuations basis, the issue was at a discount to global majors, which are trading at EV/Ebitda upwards of 14 times and price/earnings of 47 times.
Bharti Infratel will use the IPO proceeds to build new towers and upgrade the existing infrastructure. The company is expected to list on the bourses before the end of this month.
