The initial public offering (IPO) of Bharti Infratel — the largest since Coal India (CIL) hit the markets more than two years ago — closed successfully on Friday thanks to strong interest from institutional investors. The tower company, a subsidiary of Bharti Airtel, India’s largest telecom operator by subscribers, should mop up close to R4,500 crore. CIL had raised R15,475 crore issue in October 2010 just before the Sensex hit a lifetime high in early November.
Retail investors and high net worth individuals (HNIs) by and large stayed away from the issue. Data on stock exchanges showed the IPO was subscribed 1.3 times with bids coming in for 20.82 crore shares against the 16.06 crore shares on offer in the price band of R210 to R240 apiece.
The institutional portion of the IPO was subscribed 2.84 times with foreign investors accounting for bulk of the bids — 18.02 crore shares — amounting to more than R4,300 crore. Domestic financial institutions and mutual funds bid for 33.49 lakh and 43.48 lakh shares, respectively. However, the quotas reserved for retail investors and HNIs were subscribed only 0.2 and 0.3 times, respectively. The scrip is expected to be priced at R225 a piece.
The strong institutional demand for Bharti Infratel comes at a time when foreign institutional investors (FIIs) have been bullish on Indian equities. In 2012 so far, FIIs have put in more than $22 billion into Indian stocks, the second-largest amount in a year since FIIs started investing in India in 1993.
Huge inflows from FIIs have also helped the Indian benchmark indices feature among the best performers of 2012. While the Sensex has gained nearly 25% in dollar terms, the Nifty is up nearly 27% in the calendar year.
The public offer of Bharti Infratel has hit the market at a time when fund-raising has gained momentum with both private and public sector entities in the fray. While private sector companies are looking to raise nearly R7,000 crore in the coming months, the government has sold shares in two firms — Hindustan Copper and NMDC — as part of its disinvestment target of R30,000 crore