Bharti Infratel to shed 10% to raise $1 billion via IPO by year-end

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Bharti Infratel, the telecom mast arm of mobile major Bharti Airtel, on Friday filed for a USD 1 billion initial public offer (IPO) to divest 10 per cent stake by the year-end, said a senior merchant banking source directly involved with the deal.

However, Bharti Airtel, which owns around 86 per cent stake in the tower unit, said in a filing to the BSE earlier in the day that it has decided against participating in the share sale process.

"The IPO will constitute a fresh issue of equity shares by Bharti Infratel and an offer for sale portion by Compassvale Investments, GS Strategic Investments, Anadale and Nomura Asia Investment," the filing said without saying how much stake these investors will dilute.

But the merchant banking source told agencies on condition of anonymity that 'the investors will dilute 10 per cent of their stake through the IPO which will hit the markets towards the end of the calendar year'.

Without attributing any reasons for deciding against participating in the stake sale process, Bharti filing said its committee of directors, which was looking at the details of listing of Bharti Infratel, has decided not to participate in the IPO.

Other investors in Bharti Infratel include Temasek Holdings, Kohlberg Kravis Roberts & Co, Goldman Sachs, Macquarie Group, Citigroup, Investment Corporation of Dubai and AIF Capital who together hold about 13 percent, according to the source.

The source further said 75 per cent of the issue will be reserved for the primary market while the rest will be the quota for institutional investors. Standard Chartered India is the lead-banker to the issue, with JP Morgan, UBS and Bank of America being the co-book-runners.

Bharti Infratel has over 33,000 towers. Other players in the business include Anil Ambani-led Reliance Infratel and Viom Networks, a joint venture between Tata Teleservices and Kolkata-based Quippo Infrastructure.

So far, none of the tower companies is listed, although Reliance Infratel had plans to do so in the past but now is keen to sell off the business.

During the Reliance Communications AGM early in Septekber, chairman Anil Ambani had told shareholders that the tower arm will be sold as part of its effort to pare the huge debt pile, which currently is around Rs 32,000 crore, next year.