Mittal family plans to hike stake in Bharti Airtel
The Sunil Bharti Mittal family, which is the founder of the Bharti group, plans to increase its stake in Bharti their telecom venture. This will be done through the purchase of stake in Bharti Telecom Ltd. Now Bharti Telecom is the holding company of Bharti Airtel. As you must be knowing, the other major shareholder in Bharti Telecom is Singapore Telecom (Singtel). The intent of the deal is to buy the stake from Singtel. Like many of the large promoters, Mittal family is also looking into the possibility of consolidating its stake.
The hike in stake by the Mittal family is likely to result in restructuring of the shareholding pattern of the company. There is no problem of cash as the company has recently raised cash in order to bankroll the stake purchase. Mittal family has already raised close to $1 billion through debt to buyout the stake. While there has not been any official word so far from the Bharti Mittal family, this is something that is top on their agenda for years.
Currently, it is the Mittal family and Singtel, which are the two major shareholders in Bharti Telecom. While Singapore Telecom owns 50.56% stake in Bharti Telecom, the Mittal Family owns 49.44% stake in Bharti Telecom In turn, Bharti Telecom owns about 35.85% in Bharti Airtel, which gives them the effective control including their individual stakes in the company. This is not the first time that such a news has come and even in the past there had been several occasions when such a restructuring was discussed.
It is expected that post the transaction, the clout and control of the holding company will gradually shift to the Mittal family. Incidentally, to bankroll the purchase of stake, Mittal family has already raised debt to the tune of $1 billion. The Mittal family will be paying 9% interest on this debt. Bharti Airtel stock rallied on the last few weeks and this can attributed to greater acceptance of the Mittal group making all key decisions.
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