Airtel gets board nod to raise up to $3 billion
Directors of Bharti Airtel Ltd have approved the telecom operator’s proposal to raise up to $3 billion (around ₹21,500 crore) through a mix of equity and debt. The funds will be utilized to pay the company’s estimated dues of ₹35,586 crore to the department of telecommunications (DoT). The company will raise $2 billion through one or more instruments such as a qualified institutional placement, compulsory convertible debentures or other convertible securities, American depositary receipts (ADR) and global depositary receipts (GDR), according to a regulatory filing. Bharti Airtel also plans to raise up to $1 billion by issuing foreign currency convertible bonds (FCCBs), and similar security in a foreign currency, or through redeemable non-convertible debentures, it said. Bharti Airtel informed the exchanges that, for now, the total quantum of funds to be raised would not exceed $3 billion. The massive fundraising plan follows the 24 October order of the Supreme Court (SC) in the 14-year-long dispute over the definition of adjusted gross revenue (AGR) between the DoT and telecom firms. The SC asked the firms to pay the dues within three months. According to a PTI report, Bharti Airtel owes ₹21,682 crore in licence fee dues and another ₹13,904.01 crore as spectrum usage charges. This, however, does not include the dues of Telenor and Tata Teleservices, which were acquired by Airtel. On 3 December, the company increased the charges of its prepaid voice and data services by up to 47%. Two other private operators, Reliance Jio Infocomm Ltd and Vodafone Idea Ltd have also raised charges by up to 40-42%. Vodafone’s new tariffs came into effect on Tuesday, while Reliance Jio’s revised charges will be applicable from 6 December. The tariff hike by the three operators is the first of its kind in more than a decade, with years of competition ensuring that prices of calls and data services stay low.
Manipal, BRS Ventures in fray for Columbia Asia’s India hospitals
Ranjan Pai’s Manipal Hospitals and billionaire B.R. Shetty-owned BRS Ventures Investment Ltd are front-runners in the race for Columbia Asia Hospitals in India, Mint reported citing three people aware of the development. Seattle-based Columbia Pacific Management manages international healthcare businesses of Columbia Asia, a private healthcare company owned by a US-based investment fund, International Columbia USA Llc. Columbia Pacific, which had 17 hospitals in South-East Asia (12 in Malaysia, three in Indonesia and two hospitals and a clinic in Vietnam), now only operates 11 hospitals in India. The valuation of Columbia’s India hospitals is expected to be in the range of ₹1,800-2,000 crore; however, more details are likely to emerge after binding bids are submitted. The transaction is likely to close by March 2020. The sale of its India hospitals follows the sale, in September, of Columbia Pacific’s South-East Asian operations to Malaysian conglomerate Hong Leong Group and TPG Capital, for an estimated $1.2 billion. Earlier, Columbia Asia wanted to sell its India and South-East Asian hospitals in a combined deal, but it did not attract enough interest, and hence it decided to run separate sale processes for them. Besides Manipal and BRS, private equity (PE) firm General Atlantic-backed Krishna Institute of Medical Sciences (KIMS Hospitals) and Radiant Life Care Pvt. Ltd, backed by PE firm KKR and Co. have also shown interest in the asset. The process of due diligence is going on and binding bids are expected to be submitted by the end of this week. Morgan Stanley is acting as the exclusive financial advisor for the deal.
CPPIB’s Mark Machin stresses on sanctity of contracts
Sanctity of contracts, regulations and taxation is an important issue for investors around the world, said Mark Machin, president and chief executive officer at Canada’s largest pension fund manager, Canada Pension Plan Investment Board (CPPIB). To a query from Mint about foreign investor concerns on recent developments, such as in Andhra Pradesh and more recently in Maharashtra, which have seen newly elected governments review contracts signed by their predecessors, Machin said while governments have the right to review these agreements, it only creates more risks for investors. “Generally, the sanctity of contracts is an important issue around the world. It is a challenge around the world, when you have a change of government. Obviously, governments have the right to review lots of things when they come in, whether it’s at provincial, city or at the national level, but obviously, the more changes you make, the more risk you create and the more risk we have to price in the investments," Machin said at a media roundtable in Mumbai. While the recently elected government of Y.S. Jagan Mohan Reddy in Andhra Pradesh wanted to rework power purchase agreements signed by the previous government for wind and solar power, the newly-elected Shiv-Sena led Maharashtra government has said that it will review projects worth around ₹7 trillion awarded by the previous government, which includes a refinery and petrochemicals project and the Mumbai-Ahmedabad bullet train project. “When we go into an investment, especially infrastructure investments, having the certainty of the regulatory regime, certainty of taxation and certainty of contracts over a long period of time is important," said Machin. “Our job is to figure out what the risks are and to ensure that we are being sufficiently compensated for those risks. The higher the risk, the lower the valuation that is acceptable," he added.
Ujjivan SFB’s public offer subscribed 170 times on final day
The initial public offering (IPO) of Ujjivan Small Finance Bank Ltd was subscribed as many as 170 times on the final day of the share sale, making it one of the most subscribed IPOs in the last few years in India’s primary market. As of 5 pm, the small finance bank’s (SFB) share sale was subscribed 169.98 times, according to data from the stock exchanges. The portion of the share sale reserved for institutional investors was subscribed 113.8 times, while that reserved for high net-worth individuals and retail investors was subscribed 486.14 and 49.5 times, respectively. Shareholders of the bank’s parent company— Ujjivan Financial Services Ltd— subscribed to shares worth 3.27 times the portion reserved for them. Some of the most highly-subscribed IPOs in the last couple of years include Apollo Micro Systems Ltd (248.5 times), Astron Paper & Board Mill Ltd (243.29), Capacit’e Infraprojects Ltd (183), and Central Depository Services (India) Ltd (170.15). The strong interest in the share sale of the small finance bank follows the successful IPOs of state-run Indian Railway Catering and Tourism Corp. Ltd (IRCTC) in October, which was subscribed almost 112 times, and Canadian billionaire Prem Watsa’s Fairfax-owned CSB Bank Ltd, whose IPO was subscribed 87 times. The robust response to recent public offerings underscores a pent-up demand for new paper in a primary market that has seen just a handful of IPOs this year, as compared to the last two years. The ₹750 crore IPO of Ujjivan SFB opened for subscription on 2 December. The lender had set a price band of ₹36-37 for the share sale. Out of the total issue size, Ujjivan SFB had, on 29 November, mopped up ₹303.75 crore from 18 anchor investors. Investment banks Kotak Mahindra Capital, IIFL Securities and JM Financial advised Ujjivan on the share sale.
PE firm General Atlantic looks to add Badshah Masala to its India menu
New York-headquartered private equity firm General Atlantic is in talks to acquire iconic Mumbai-based spice maker Badshah Masala, through its investee company Capital Foods, the owner of the popular "Chings Secret" brand of instant noodles and sauces, Moneycontrol reported citing sources with knowledge of the matter. The deal is in an advanced stage of negotiations and the signing of agreements and an official announcement is likely this month. The Badshah Masala brand is owned by Jhaveri Industries and the promoters, the Jhaveri family, are looking to sell a controlling stake of 76 percent in the company to Capital Foods. The plan is for Hemant Jhaveri to make a complete exit by selling his entire 55 percent stake in the company. His cousin brother Kailash Jhaveri holds the remaining 45 percent stake and is set to make a partial exit by selling 21 percent stake. Badshah Masala is one of the oldest spice brands in the country and has a massive network of points of sales. General Atlantic wants Capital Foods to expand aggressively into newer, additional segments of food ingredients. Moneycontrol could not independently verify the value of the proposed transaction. Jhaveri Industries had revenues of around ₹350-400 crores for FY19, as per reports. It sells 48 varieties of blended spices and ground spices ranging from red chilli powder to curry masala and has a manufacturing unit at Umbergaon, Gujarat. Exports to countries like USA, United Arab Emirates, Tanzania and Singapore account for a third of the firm's sales.