GIC to pick up Bharti Airtel stake in third-biggest India investment
Photo Credit: Reuters

Singapore sovereign wealth fund GIC Pte. Ltd will invest Rs 5,000 crore ($700 million) in Bharti Airtel Ltd, marking its third-biggest bet on an Indian company and boosting the telecom operator’s war chest amid stiff competition.

GIC joins investors from Japan to Canada in pumping money into Airtel and its group companies to help cut its debt and fight off competition from billionaire Mukesh Ambani’s Reliance Jio Infocomm Ltd.

Billionaire Sunil Mittal-led Bharti Airtel said in a stock-exchange filing on Thursday that GIC’s investment will be part of a rights issue to shareholders in which its promoters—Bharti Group, Bharti Telecom and Singapore Telecommunications Ltd (Singtel)—will also take part. The total size of the rights issue is Rs 25,000 crore.

The promoters will subscribe to shares worth Rs 11,785.7 crore. Singtel said in a separate statement it will invest Rs 3,750 crore, representing the rights entitlement for its direct stake of 15%. Bharti Telecom will renounce its rights for shares worth Rs 5,000 crore in favour of GIC, Singtel said.

Singtel’s effective interest in Airtel will be 35.2% after the completion of the rights issue, and it will remain the single-largest shareholder in the telecom operator.

Apart from the rights issue, Bharti Airtel also plans to raise Rs 7,000 crore via an offshore bond offering. The company, like Vodafone Idea Ltd, is fighting off the onslaught of Jio’s price war and is seeking to reduce its debt by more than half. It needs funds also to pay for spectrum, invest in its networks and strengthen its balance sheet.

Over the past year and a half, Bharti Airtel and some of its group companies have mopped up a large amount of capital from overseas investors. In October, it mobilised $1.25 billion from six global investors including Warburg Pincus, Temasek, Singtel and SoftBank Group to help its Africa unit reduce its $5 billion debt.

In February last year, Singtel agreed to invest $413 million in Bharti Telecom. Bharti Airtel separately sold a 20% stake in direct-to-home television arm Bharti Telemedia to Warburg Pincus for $350 million.

In December last year, Bharti Airtel said it was exploring an additional stake sale in its tower arm Bharti Infratel Ltd. Bharti Airtel had, in March 2017, sold a 10.3% stake in Bharti Infratel to private equity firm KKR and Canada Pension Plan Investment Board for $951.6 million. In November 2017, Bharti Airtel sold another 4.49% stake in its tower arm for $510 million. In April last year, Bharti Infratel agreed to merge with Indus Towers.

GIC and Singtel

GIC is one of the most active sovereign wealth funds in India. It strikes equity market deals as well as big-ticket transactions in real estate and private equity-style transactions at large.  It is also a large limited partner, or investor, in many Indian PE and venture capital funds.

The investment is Bharti Airtel is possibly GIC’s third-largest, after its bets on mortgage lender HDFC Ltd and developer DLF Ltd. GIC had invested more than $800 million in HDFC last year and pumped in $1.4 billion in the rental arm of DLF the year before.

In 2018, GIC also struck a series of other real estate transactions and emerged among the most active investors.

Meanwhile, Singtel has been slowly increasing its stake in Bharti Airtel over the years. In February 2018, it invested about $400 million, hiking its stake to about 39.5%.

Apart from Airtel, Singtel has invested in telecom companies across Southeast Asia including in Indonesia’s Telekomsel, Globe Telecom in the Philippines and Advance Info Service in Thailand. It is present in Australia through wholly owned subsidiary Optus.

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