Telecom tower firm Bharti Infratel, which saw modest investor interest in its maiden public float, was greeted with a less than enthusiastic mood on Friday. Its share price opened around 10 per cent down and last traded at Rs 191.2 a unit in a strong Mumbai market on Friday.
The company had fixed an issue price of Rs 210 for retail shareholders and Rs 220 a share for institutional investors and HNIs, in the biggest initial public offer in two years. This, itself, was at the lower end of the IPO price band of Rs 210-240 a share.
Bharti Infratel's debut was in contrast to the two other stock debuts this week. While PE-backed ratings and research firm CARE saw its share price surge, having priced its issue at a discount to listed peers, another firm PC Jeweller Ltd also saw positive opening.
The company managed to raise around Rs 4,156 crore through the issue, which includes both secondary shares offered for sale and primary issue of shares.
One-fourth of the proceeds of the issue would go to the four selling financial investors including Singapore’s sovereign wealth fund Temasek, Goldman Sachs’ investment arm and the Japanese financial services group Nomura.
All the four selling shareholders had invested at an average acquisition cost of around Rs 219 a share in March 2008, after announcing a mega PE deal at the fag end of 2007 or the peak of the bull market. This means in rupee terms these investors part-exited almost on par with the price at which they bought the shares. However, on the unsold portion of their holding they are sitting on notional loss of around 13 per cent.
In dollar terms, the haircut is much higher (see our previous report looking at returns for the PE investors here).
Temasek, which led the over-$1.25 billion PE funding round in FY08, had put in close to $500 million or a tad less than Rs 2,000 crore in Bharti Infratel through a mix of equity purchase and compulsory convertible debentures. Temasek is also an investor in Bharti Airtel.
Bharti Airtel, which holds 86 per cent of the tower arm, did not sell any share and owns around 79.4 per cent stake in the company post issue.
KKR, which has stayed put and has not sold shares in the IPO, had put in close to $250 million with a similar average acquisition cost of Rs 219 a share.
Others who had invested in Bharti Infratel in a mega deal include Investment Corporation of Dubai, Macquarie, AIF Capital, Citigroup, India Equity Partners and Axa Private Equity.
At the current price, Bharti Infratel is valued around Rs 36,110 crore or 9.8x last year’s EBITDA, 48x PAT and Rs 45.4 lakh per tower.
GTL Infrastructure, the other listed telecom tower firm which is deep into losses, currently has a market cap of just around Rs 880 crore.
Bharti Infratel IPO had as many as 13 investment bankers including BofA Merrill Lynch, JP Morgan, StanChart and UBS as global co-ordinators and book running lead managers (BRLMs); Barclays, Deutsche, Enam, HSBC and Kotak as BRLMs, and BNP Paribas, DBS, HDFC and I-Sec as co-BRLMs.
(Edited by Prem Udayabhanu)