Qatar Foundation Endowment to buy 5% in Bharti Airtel for $1.26B

Bharti Airtel, the world’s fourth-biggest cellular carrier by customers, is raising $1.26 billion (Rs 6,796 crore) from Qatar Foundation Endowment by selling 5 per cent stake through a fresh issue of shares.

The deal is the largest ever private equity investment in India over the last five years and second only to the previous big deal where Temasek had invested a record $2 billion to buy indirect stake in Bharti Airtel.

The shares are being issued at Rs 340 per unit. Bharti Airtel’s scrip was up over 4.5 per cent in the morning trade on Friday to Rs 331 per unit.

Bharti Airtel said that the deal would strengthen its capital structure and improve flexibility for its growth strategy. Bharti will also gain exposure to the strong investor base in the Middle East, in addition to South-east Asia, the statement added.

Goldman Sachs acted as the sole financial advisor to QFE on this investment.

Bharti Airtel has operations in 20 countries across Asia and Africa with 271 million customers across its operations at the end of March 2013.

“This strategic partnership with QFE demonstrates the confidence it has in the company and our strategy for growth. In addition, this agreement exemplifies further strengthening of the already deep economic and cultural relations between Qatar and India. We look forward to a long and fruitful partnership with QFE,” said Bharti chairman Sunil Bharti Mittal.

Bharti Airtel has roped in investors like Warburg Pincus to fund its growth in the past. Singtel, which is owned by Singapore government's investment arm Temasek Holdings, is the second largest shareholder in Bharti Airtel after its promoters. Other current shareholders include LIC (5.53 per cent) and ICICI Prudential Life Insurance (1.53 per cent).

The deal comes a day after Bharti Airtel announced its FY13 results where its net profit dipped to a seven-year low to Rs 2,276 crore while revenues were up 12.4 per cent to Rs 80,311 crore.

The deal will also help the telco reduce its debt burden. Bharti has a debt burden of Rs 63,839 crore, mainly on account of borrowing to pay for spectrum in India and to purchase the Africa operations of Zain Telecom for about $9 billion.

Qatar Foundation Endowment was recently established to provide a sustainable income stream that will ultimately fund the Qatar Foundation for Education, Science and Community Development operations.

(Edited by Sanghamitra Mandal)

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