Airtel raises $3 billion dollars via QIP, FCCB offering

Airtel said the transaction is the largest ever dual tranche equity and FCCB offering in Asia Pacific, largest QIP ever by a private sector issuer in India, and largest FCCB offering from an India issuer in the last 12 years.

Bharti Airtel has to pay billions in statutory dues. (REUTERS)

Bharti Airtel has raised $3 billion through QIP and FCCB route, completing a massive fund raising exercise for the firm, which has to pay billions of dollars in statutory dues.

Post the $2 billion Qualified Institutional Placement (QIP) issue, the holding of promoter and promoter group will come down to 58.98 per cent as against 62.70 per cent, Bharti Airtel said in a statement.

"The company...will issue 32,35,95,505 equity shares of face value of ₹5 per equity share at a price of ₹445 which implies a discount of 1.57 per cent on the SEBI (Securities and Exchange Board of India) determined floor price of ₹452.09 per equity share," the statement said.

The offer saw participation by marquee global and Indian investors, it added. The transaction is the largest ever dual tranche equity and FCCB offering in Asia Pacific, largest QIP ever by a private sector issuer in India, and largest FCCB offering from an India issuer in the last 12 years, the company added.

Bharti Airtel, Vodafone Idea and other telcos owe the government nearly ₹1.47 lakh crore in past statutory dues. These liabilities arose after the Supreme Court in October last year upheld the government's position on including revenue from non-core businesses for calculating the annual AGR (Adjusted Gross Revenue) of telecom companies, a share of which is paid as licence and spectrum fees to the exchequer.

The statutory liabilities in the case of Bharti Airtel adds up to nearly ₹35,586 crore, of which ₹21,682 crore is licence fee and another ₹13,904.01 crore is spectrum dues (excluding the dues of Telenor and Tata Teleservices).

Earlier this month, shareholders of Bharti Airtel had approved proposals to raise up to USD 2 billion (over ₹14,000 crore) in equity and another USD 1 billion (around ₹7,000 crore) in debt.

In a statement on Wednesday, Airtel said it has "raised USD 2 billion through the QIP route and USD 1 billion through FCCBs". The participation was by diversified investor base, which includes global long only funds, sovereign wealth funds, domestic mutual funds, multi-strategy funds and insurance companies in sizable quantities, it added.

Long only investors comprised 80 per cent of the demand for the QIP. The company said the FCCB offering was multiple times oversubscribed with very strong demand from Asian and European funds.

"The FCCB was priced at a coupon of 1.5 per cent per annum, yield-to-maturity of 2 per cent per annum and a conversion premium of 20 per cent above the final QIP price of ₹445," it said.

Harjeet Kohli, Group Director of Bharti Enterprises, said the offering witnessed a strong response from the global and domestic investor community, despite a volatile market environment and challenging global macro-economic conditions.

"This underlines Airtel's growth oriented financial performance and future growth potential of our business and the sector. We are delighted with the participation and continuing support of high quality investors thereby ensuring further diversification of the shareholder base of Bharti Airtel." Airtel said that the proceeds of the fund will be used for augmenting the company's long term resources and strengthening the balance sheet, servicing and repayment of short term and long term debts, towards statutory dues, and long term working capital requirements.

Airtel shares closed at ₹467.10 apiece on Wednesday, 0.50 per cent lower than the previous closing.