Bharti Telecom plans to use NCDs to raise up to Rs6,000 crore in debt

13 Sept 2022 , 10:18 AM

An important Bharti Airtel promoter business, Bharti Telecom (BTL), intends to use non-convertible debentures (NCDs) to generate up to Rs6,000 crore in debt in order to purchase the remaining 3.33% of Singapore Telecommunications’ (Singtel) stake in the Indian telco.

According to news reports, leading foreign portfolio investors (FPIs) are likely to subscribe to the planned rupee-linked NCDs in large numbers. They also mentioned that certain regional institutional investors might take part.

Singtel sold 1.76% of Airtel last week in block agreements for just over Rs7,100 crore. BTL purchased the majority of that stake–roughly 1.62%–for Rs6,604 crore, while public Airtel stockholders purchased the remaining 0.14%. One of the reports claimed that BTL is currently raising new financing to help partially finance the purchase of the final 1.57% stake from Singtel.

Among others, BNP Paribas, HSBC, Japan's MUFG, and Standard Chartered Bank are probably assisting BTL in raising the funds through rupee-linked NCDs.

The Southeast Asian carrier has ruled out any additional stock investment in BTL, according to analysts, thus the Bharti Group will need to acquire debt to pay for the stake purchase in Singtel. The Mittals own 50.56% and 49.44% of BTL, which in turn owns a little over 37% of Bharti Airtel, respectively, through their ownership of Bharti Enterprises and Singtel.

In an effort to maximize shareholder returns and returns on invested capital, Singtel announced last month that it will sell a 3.33% stake in Airtel to BTL for $1.61 billion (about Rs12,900 crore) over a 90-day period. Additionally, Singtel and Sunil Mittal's Bharti Enterprises are trying to gradually equalize their respective effective shareholdings in Airtel.

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