The development has come ahead of the company’s plan of coming out with an initial public offer
Airtel Africa, a subsidiary of Bharti Airtel, on Wednesday announced raising of $1.25 billion from six global investors including SoftBank Group, Warburg Pincus, Singtel and Temasek Holdings.
The development has come ahead of the company’s plan of coming out with an initial public offer (IPO).
The funds will be raised through a primary equity issuance. It now values the company at $4.4 billion.
Besides, the funds will be used to reduce existing debt of about $5 billion and grow its Africa operations, Airtel Africa said in a statement.
“The transaction will help us further deleverage our balance-sheet and boost our capacity to upgrade networks, expand coverage in different markets and achieve rapid growth of Airtel Money across our operations,” Raghunath Mandava, chief executive of Bharti Airtel’s Africa unit, said. Airtel will announce its financial results for the second quarter ended September today. Airtel has equity stake of 92-93% in Africa unit which will come down to 64-65% post the stake sale announced on Wednesday.
Bharti Airtel had net debt of $15.8 billion and the proceeds from the deal will reduce net debt by 8%, according to an analyst note by ICICI Securities.
“Airtel Africa has seen a turnaround of its business in recent years. This investment demonstrates the confidence of leading global investors in the company’s ongoing robust growth and profitability,” the company said. The present transaction will not involve any sale of shares by existing shareholders. Airtel operates in 14 African markets including the Democratic Republic of the Congo, Kenya, Nigeria, Rwanda, Seychelles, Uganda and Zambia.
Analysts from Jefferies said, “We expect steady growth in Africa but expect competitive intensity and pressures in India to continue for another 9-12 months.”
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