Here’s How Much Mittal, Munjal Own In Airtel Africa

Founder-promoter Sunil Mittal and Sunil Kant Munjal of Hero Enterprise own stake in Bharti Airtel’s Africa unit.

The Bharti Airtel Ltd. logo sits on company’s retail store in Mumbai, India. (Photo: Dhiraj Singh/Bloomberg)
The Bharti Airtel Ltd. logo sits on company’s retail store in Mumbai, India. (Photo: Dhiraj Singh/Bloomberg)

In October last year, Bharti Airtel Ltd.’s Africa unit raised $1.25 billion from six investors but disclosed the names of only four. The other two, latest filings reveal, are founder-promoter Sunil Mittal and Sunil Kant Munjal of Hero Enterprise.

Munjal, who left India’s largest two-wheeler maker Hero MotoCorp Ltd. in an ownership split in 2016, owns 4.37 percent, according to the Airtel Africa’s filings with the London Stock Exchange for an initial public offering. He bought the stake for $200 million (Rs 1,392 crore at the current exchange rate).

Mittal, through his private arm Indian Continent Investment Ltd., bought 5.46 percent for $250 million (Rs 1,740 crore at the current exchange rate). Mittal’s total holding, including indirect ownership through Bharti Airtel, stands at 9.9 percent.

The Africa unit has filed for an IPO to help parent pare debt. That rose because of capital expenditure on India business at time revenue and profits fell because of a bruising tariff war unleashed by Reliance Jio Infocomm Ltd.

The unit raised close to $1.25 billion from six investors, also including Warburg Pincus, Temasek, SingTel and SoftBank Group. It raised $200 million from Qatar Investment Authority. Proceeds from both the fundraises were used to repay debt.

Bharti Airtel Plans London IPO for Africa Unit to Cut Debt

Airtel Africa intends to raise funds by issuing new share to ensure a free float of at least 25 percent, as required under the LSE’s listing guidelines. The company may also look to sell 15 percent additional shares depending on the demand.

But shares held by Bharti Airtel, Warburg Pincus, SingTel and Sunil Mittal Family Group shareholding won’t come under free float. That’s because the LSE guidelines don’t include in free-float category the shares held by:

  • directors of the company or group members;
  • persons connected with directors of the company or group members;
  • trustees of any group employee share scheme or pension fund;
  • a person who has the right to nominate a director;
  • and persons who individually or acting in concert hold 5 percent or more stake.

What that means is to meet the 25 percent free-float criteria, the company will have to sell at least 488.3 million new shares, according to BloombergQuint’s calculation.

Selling 488.3 million new shares would result in equity dilution of 13.7 percent, fetching Airtel Africa close to $725 million at $1.48 per share, the value at which it last raised funds. The sale of additional 15 percent of the offer would fetch $108 million more. To be sure, the actual funds raised and share dilution would depend on how many shares the company sells and at what value.

Airtel Africa intends to distribute at least 80 percent of its consolidated free cash flow to its shareholders as long as its leverage—net-debt-to-Ebitda ratio— remains between 2 to 2.5 times. At the end of financial year 2019, Airtel Africa had net debt of close to $4 billion and a leverage of 3 times. If the company raises close to $725 million, that would fall below 2.5 times meeting the condition to pay dividends.