New Delhi: Markets regulator Securities and Exchange Board of India (Sebi) said on Sunday it will seek more information from Bharti Airtel Ltd on its proposed $23 billion deal with South African telecom firm MTN Group once there is more clarity on it.
Regulatory watch: Sebi chairman C.B. Bhave said he will allow complication in the deal as long as he is satisfied with it. Harikrishna Katragadda / Mint
On the exemption given to MTN from open offer now, Sebi chairman C.B. Bhave said, “...(it) was under a scheme of advance ruling... What advice we have given them is correct... whether we will study the deal further and things like that we will see because the deal is not yet done”.
Last week, Sebi had said that the South African firm need not make an open offer to Bharti Airtel shareholders in India as its shareholding in the Sunil Mittal-promoted firm would be through Global Depository Reciepts (GDRs).
Sebi said the open offer will only trigger once the GDRs, issued to MTN and its shareholders by Bharti Airtel are converted into local shares with voting rights.
Asked about the complicated nature of the deal that could be beyond the understanding of common investors Bhave said, “As long as we are satisfied with that, we will allow complication to happen...”
The proposed $23 billion transaction between the largest mobile phone operator in India and the African firm involves a complex structure, according to which, both entities would pay cash and equity to get each other’s stake.
Bhave said, “As far complicated deals are concerned, it is in the nature of innovation. People will try to make more and more complicated deals, complicated products and so on. What as regulator we need to make sure is that complication is not just for the sake of getting over something else.”
“As long as we are satisfied with that we will allow complication to happen in the world because the world is complicated,” Bhave added.
The proposal, if it works out, will result in Bharti Airtel getting a 49% stake in MTN and the South African telco a 36% “economic interest” in Bharti Airtel.