Bharti Airtel’s board on Wednesday approved a ₹28,220 crore share-swap deal with Indian Continent Investment (ICIL) to raise its stake in UK-listed subsidiary Airtel Africa, while increasing ICIL’s holding in Bharti Airtel by about 2.3 percentage points in one of India’s largest related-party transactions.ICIL is a Mauritius-based investment entity functioning as a family office investment vehicle for the Sunil Bharti Mittal family, a promoter group entity of Bharti Airtel.
Analysts termed the move positive for Airtel, saying the Street had expected an all-cash transaction.Read more: India working on subsea gas pipeline projectThat would have required the company to draw down its large cash reserves.
Instead, the deal structure preserves cash while helping the Mittal family narrow the gap with another key promoter shareholder, Singtel Group. 131076622The transaction will also allow the Mittal family to consolidate investments in Bharti Airtel, potentially easing future fundraising through equity sales, analysts said. “Instead of Bharti paying cash (of ₹28,200 crore) to buy ICIL’s Africa stake, it is paying through newly issued shares and would consolidate Africa holding to 79%.
There is 2.4% dilution for existing shareholders in India,” Bank of America said in a research report on Wednesday.Read more: Siemens eyes exit from cancer care chain American Oncology InstituteUnder the agreement, Airtel will issue about 146.7 million new shares at ₹1,923 apiece to ICIL through a preferential allotment.
