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Airtel Africa falls 16% after London listing

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Kolkata: Airtel Africa Plc made a weak debut on the London Stock Exchange Friday with its shares opening well below the issue price of 80 pence a share, the bottom-end of the indicative price range.

The telco, a unit of Bharti Airtel, also completed a listing on the Nigerian stock exchange, raising a combined $750 million (Rs 5,250 crore), which will be used to pare debt and free up cash to fight in an intensely competitive Indian market. After opening at 77 pence, the shares fell a sharp 16% to 67 pence on the LSE Friday.

The stock was trading at 67.90 pence at press time.

Parent Bharti Airtel’s shares closed 0.65% down at Rs 345.75 on the Bombay Stock Exchange Friday. Airtel Africa, a Bharti Airtel unit, has nearly 99 million customers and operations in 14 countries in the continent.

In a statement Friday, the company said its London IPO was oversubscribed with strong interest from reputed global investors across the UK, US, Africa, Europe, Middle East and Asia. Airtel Africa chairman Sunil Mittal said the strong support that the company has received from institutional investors “demonstrates the attractive investment proposition” it offers the market. “Since first investing in Africa almost nine years ago, we have leveraged our expertise in emerging markets to deliver on a clearly defined strategy to build Airtel Africa into a market-leading mobile service provider, increasingly expanding beyond voice into data services and Airtel Money,” Mittal, who is also Bharti Airtel chairman, said in the statement. Chief executive Raghunath Mandava added that Airtel Africa is the first telco to “simultaneously list on the premium segment of the London and Nigerian stock exchanges through an IPO”. The final offer comprised some 744.04 million new shares, setting the IPO size at £595 million ($750 million), setting a market capitalisation at roughly £3.1 billion ($3.9 billion) at issue.

It represents roughly 19% of the company’s issued share capital, immediately following UK Admission and Nigerian Admission (including the over-allotment option), Airtel Africa said. Last week, Airtel’s Africa arm had set a price range of 80-100 pence per share for its London IPO in its bid to raise $750 million, lower than the earlier anticipated $1 billion.

The IPO pricing was at a 32% discount to the price at which global investors like Warburg Pincus, Singtel, SoftBank, Temasek and others had invested last year, which netted $1.45 billion for the company.

Parent, Bharti Airtel had managed to cut the net debt of its Africa arm to $4 billion at the end of March by virtue of the pre-IPO placements.

Airtel’s consolidated debt is some $15 billion. Brokerage Jeffries has said the 80 pence per share IPO pricing would not lead to “any value unlocking” for Airtel Africa as it implies a “trailing EV/ Ebitda of 5.3x, which is well below the previous round at 7.4x and peers at 5.6x-7.6x”.




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