Bharti Airtel receives a Rs 13,173 crore investment as Singtel sells a 1.2% ownership stake.
In a significant move, Singapore-based telecom giant, Singtel, has shed 1.2% of its direct stake in India's second-largest telco, Bharti Airtel, pocketing approximately ₹13,173 crore ($1.5 billion) through multiple block deals.
Singtel, which also holds a stake in Airtel's promoter, Bharti Telecom, claims this decision forms part of its active capital management approach, focusing on optimizing its asset portfolio and driving sustainable shareholder returns.
The private placement garnered overwhelming interest, making the deal well oversubscribed, with both transaction size and final pricing overshooting initial estimates. According to Singtel, the majority of the stake was offloaded to domestic mutual funds and international long-only funds, including existing Airtel shareholders.
Arthur Lang, Singtel's Group CFO, asserted the transaction crystallized value at an attractive valuation while Singtel remains a substantial Airtel shareholder. He also expressed confidence that the transaction would fortify Airtel's shareholder base, empowering them to support the company's long-term growth.
Post-sale, Singtel's holding in Airtel stands at 28.3%, equivalent to an estimated S$48 billion. This stake sale is the latest in a series of transactions initiated by Singtel to offload shares in Airtel, attempting to unlock value for shareholders and support the company's growth initiatives.
Over the past few years, Singtel has been associated with Bharti Enterprises for over two decades, aiming to equalize its effective stake in Airtel over the medium term.
This strategic move is rooted in Singtel's commitment to managing capital actively, unlocking value for shareholders, and maintaining a significant stake in Airtel's growth story. On the flip side, the transaction diversified Airtel's institutional shareholder base, although it temporarily dragged down Airtel's share price on the Bombay Stock Exchange on the day of the deal closure.
- Singtel's decision to offload a portion of its stake in Airtel is part of a broader approach in the finance industry to optimize portfolio returns through active capital management.
- The private placement of Singtel's shares in Airtel was well-received by domestic mutual funds, international long-only funds, and existing Airtel shareholders, demonstrating a strong interest in the trading of Airtel's stocks.
- The finance sector has seen a trend of companies like Singtel selling their shares to unlock value for shareholders and support growth initiatives, a practice often seen in the Defi industry as well.
- The profound impact of this transaction extends beyond Singtel and Airtel, with consequences for the entire market, including increased liquidity on the exchange and a potentially wider shareholder base for Airtel, bolstering its long-term growth prospects.
