Airtel’s $2 billion QIP subscribed 3 times2 min read . Updated: 09 Jan 2020, 11:55 PM IST
- Issue saw investments from GIC, Temasek and PE firm Warburg
- Airtel on Wednesday launched the $2-bn QIP at a floor price of ₹452 per share
MUMBAI : Bharti Airtel Ltd’s $2-billion qualified institutional placement (QIP), the largest such share sale by a private company in India, was subscribed three times, two people aware of the development said, requesting anonymity.
The telecom operator launched the QIP on Wednesday at a floor price of ₹452 per share, and a separate foreign currency convertible bond (FCCB) issue of up to $1 billion.
Last year, Axis Bank had raised $1.75 billion through a QIP, which was the previous record. In May 2019, Airtel had raised ₹25,000 crore through a rights issue. Several prominent investors, including Singapore’s sovereign fund managers GIC and Temasek, and private equity firm Warburg Pincus, participated in the QIP, said the first person.
“There was strong demand for Airtel shares, and the QIP book was subscribed three times with both foreign and domestic institutional investors subscribing to the shares on offer. The deal saw participation from over 100 investors," he added.
Other investors that subscribed to Airtel shares include funds managed by Goldman Sachs and Capital Group, and domestic mutual funds, including HDFC Mutual, Birla SunLife Mutual Fund and SBI Mutual Fund, said the second person. “Investors are bullish on Airtel despite the recent AGR (adjusted gross revenue) dues. Performance metrics, such as ARPU (average revenue per user), are improving for all the players with the recent price hikes, and they are only expected to get better from here on," he added.
Airtel has also resorted to two rounds of tariff hikes in November and December. On 29 December, it had raised the minimum monthly recharge for prepaid users to ₹45 with immediate effect, more than a year after setting it at ₹35. Bharti Airtel, Temasek and Warburg spokespersons declined to comment on the development. Email queries to other investors remained unanswered.
The fundraise comes more than two months after the 24 October order of the Supreme Court upholding the government’s definition of revenue that includes revenue from non-core telecom operations such as rent, dividend and interest income. Licensees have to pay 8% of their AGR as licence fee to DoT. The verdict settled a 14-year dispute between DoT and operators. Bharti Airtel posted a ₹23,045-crore loss in the September quarter, its highest and second quarterly loss in 14 years, compared to a profit of ₹118 crore a year ago, as it set aside ₹34,260 crore to pay the AGR dues. Investment banks Axis Capital, JPMorgan and Citigroup, Bank of America, among others, were advising the telecom operator on the share sale.
India’s telecom sector witnessed disruption after the entry of Jio, a subsidiary of Reliance Industries Ltd, in September 2016, bringing down data prices to rock bottom. Following this, half-a-dozen telcos either shut shop or were acquired by bigger players. The domestic telecom market is now largely a three-way play between Bharti Airtel, Vodafone Idea and Reliance Jio.
Airtel will also require resources as the government prepares to hold the first spectrum auction for 5G airwaves by April. DoT plans to put 8,300 megahertz of spectrum at a reserve price of ₹5.23 trillion under the hammer. Of the 8,300MHz, 6,050MHz are allocated for 5G services.