Singtel unit sells 0.8% stake in Bharti Airtel for about S$1.5 billion, booking estimated S$1.1 billion gain

[SINGAPORE] Singtel announced its indirect wholly owned subsidiary Pastel has raised gross proceeds of about S$1.5 billion from selling a 0.8 per cent stake in its regional associate, Bharti Airtel.

In a press statement on the Singapore Exchange (SGX) on Friday (Nov 7), the group announced the transaction will result in an estimated gain of S$1.1 billion.

After the completion of the sale, it reduces Singtel’s effective stake in Bharti Airtel to 27.5 from 28.3 per cent. The group’s remaining stake is valued at an estimated S$51 billion.

According to a separate announcement on SGX, Singtel’s indirect wholly owned subsidiary, Pastel, sold 51 million shares of Bharti Airtel, raising aggregate gross proceeds of about S$1.5 billion. Singtel noted the transaction was executed via a private placement to institutional investors, reflecting strong demand.

The pricing of 2,030 rupees (S$29.88) per share was determined on an “arm’s length and willing-buyer willing-seller basis”, the announcement read. 

Arthur Lang, Singtel’s group chief financial officer, stated that the group has been working with Bharti Enterprises to “gradually equalise” its effective stake in Airtel over time.

“These transactions allow us to unlock value when appropriate, yet continue to retain a significant stake in Airtel and remain invested in India’s burgeoning digital economy,” he said.

He added that the S$5.6 billion raised is more than half its new mid-term asset recycling target of S$9 billion, and provides “financial flexibility to strengthen our balance sheet, fund growth opportunities in digital infrastructure and digital services”.

This sale is part of Singtel’s ongoing capital management programme. Proceeds will also be used for capital returns, including its value realisation dividend and share buyback programmes, the statement read.

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Bloomberg reported that the settlement is expected on Nov 10, and there is a lockup of 60 days. JPMorgan Chase is the sole broker. 

Shares of Bharti Airtel have rallied more than 30 per cent this year, making the company the third-biggest member of the benchmark Nifty 50 Index by market value.

Along with separate news that Singtel is also in reported talks with global investment firm KKR & Co to fully own ST Telemedia Global Data Centres, shares of the telecommunications operator have risen to an all-time high on Friday. The counter was at S$4.73 at 9.11 am, a rise of S$0.23 from its previous close of S$4.50.