November 23, 2012 2:45 pm

Bharti telecoms tower unit set for IPO

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India’s Bharti Infratel, the telecoms tower unit of Bharti Airtel, is planning to raise $800m-$900m by the end of the year in an initial public offering expected to be the country’s largest in two years.

Two people familiar with the IPO plans said the aim was to sell 10 per cent of Bharti Infratel, mostly to raise new money but also to provide an exit for private equity investors such as Goldman Sachs and Temasek, the Singapore state investment agency. If priced as predicted, the flotation would value the business at up to $9bn.

The intended IPO, mooted for more than a year and first confirmed on Friday by Reuters, is a sign that Indian stocks remain in demand among foreign and local investors despite worries about a recent sharp slowdown in the real economy and the Congress-led coalition government’s difficulties in pushing ahead with reforms.

“India’s IPO market is definitely opening up,” said one international fund manager.

Bankers in Mumbai said the Bharti towers IPO, which awaits approval from the regulator, could be followed by other telecom infrastructure flotations.

Bharti Infratel owns over 34,000 mobile telephone masts and holds a 42 per cent stake in Indus Towers, a joint venture with other telecoms groups.

The global co-ordinators for the Bharti Infratel sale include JPMorgan, Bank of America Merrill Lynch, Standard Chartered and UBS.

India’s government has relaunched a privatisation programme in an attempt to cut its budget deficit, and on Thursday made the first of several expected deals with the sale of 4 per cent of Hindustan Copper to raise Rs6.1bn ($110m).

Amid controversy over the pricing – the few Hindustan Copper shares already listed fell the maximum 20 per cent on Thursday to Rs213 because the government had set a floor of Rs155 a share for the sale – the finance minister said he hoped to raise the targeted Rs300bn from all state disposals in the current fiscal year. “I am happy that the issue has been fully subscribed,” said Palaniappan Chidambaram. “This is the resumption of the disinvestment process.”

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Earlier this week, senior ministers approved the sale of a further 9.5 per cent stake in NTPC, the big power generator.

The government also wants to sell stakes in state-owned Oil India, National Aluminium and trading group MMTC.

In March, the government was criticised over its handling of the sale of 5 per cent in Oil and Natural Gas Corp. The stake raised $2.45bn, but only after the process aroused suspicions that state-owned Life Insurance Corp of India had been mobilised to rescue a sale that might otherwise have been undersubscribed.

The Hindustan Copper sale on Friday was only marginally oversubscribed, and the average price a share was Rs157, just above the floor, suggesting that state banks and LIC may again have been important buyers.

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