Airtel raises $750 million via perpetual bonds
The proceeds shall be used for deleveraging through refinancing, investments in subsidiaries and general corporate purpose.
People aware of the placements said that fund asset managers, insurance companies, pension funds and banks across Europe, Asia and US have picked up the bonds, which have been priced at par at a coupon and yield of 5.650%.
“In the backdrop of the current global economic environment, the strong response for our inaugural hybrid securities offering from high quality investors across Asia, Europe and the United States underlines the future growth potential of our business,” said Ashish Sardana, head of treasury at Bharti Airtel.
The proceeds shall be used for deleveraging through refinancing, investments in subsidiaries and general corporate purpose, he added. The carrier’s scrip rose 5.2% to close at Rs 359.25 on the Bombay Stock Exchange, Wednesday.
The perpetual bonds are a quasi-equity obligation without a fixed maturity, which will have a five and a half years non-call period, which means that debt cannot be repaid before this period. The bonds are guaranteed by Bharti Airtel Limited and are expected to be rated BB by both S&P and Fitch, the company added.
Barclays Bank PLC, BNP Paribas, Citigroup Global Markets Limited, Hongkong and Shanghai Banking Corporation, J.P. Morgan Securities, Merrill Lynch (Singapore) Pte. Ltd. and Standard Chartered Bank were joint bookrunners for this fund raise.
The fund raise makes it the ninth time that India’s No 2 carrier by subscribers has raised through bonds since 2013, insiders added, of which all but one tapped international investors. While six of the bonds issued – to raise about Rs 43,888 crore – are due in the coming years, the perpetual hybrid bonds are the seventh such issue. Two of the bonds issued earlier have matured in 2018.
Airtel reported a debt of Rs 1.16 lakh crore at the end of June. The company is trying to strengthen its balance sheet by halving debt by end of this fiscal year, while retaining only its liabilities to the government for spectrum purchased at auction, as ET reported on September 19. This will allow it to compete aggressively for subscribers with Reliance Jio and Vodafone Idea.
Gopal Vittal, the telco’s CEO for India and South Asia, has set a target of crossing 35 per cent domestic revenue market share, from 31.4 per cent now, in the next two to three quarters by targeting rivals and expanding its own 4G user base to push up average revenue per user, ET reported on September 30.