March 14: Warburg Pincus, the US-based private equity fund, harvested a gold mine today when it sold a 6.04 per cent stake in Bharti Tele-Ventures in a block deal valued at close to Rs 2500 crore.
The sale came just three days after Sunil Bharti Mittal, promoter of the Bharti group, had sold his small personal holding of 0.15 per cent in the company to net about Rs 60 crore. However, Mittal continues to hold close to 46.5 per cent of the stock as a promoter of Bharti Enterprises.
The private equity fund, which holds its stake in Bharti Tele-Ventures through its investment company Brentwood Investment Holdings Ltd, struck two block deals today on the Bombay Stock Exchange from which it earned Rs 2466.7 crore, making it the biggest block transaction on Indian bourses. The strike prices for the two deals were Rs 218 and Rs 223.90.
Market sources said the buyers included Capital International, Fidelity Investments and the Government of Singapore (the name of its investment arm was not revealed).
The BSE has posted the names of Euro Pacific Growth Fund and The Growth Fund of America as the buyers of 5.93 crore shares and 2 crore shares respectively in Bharti Tele-Ventures. They are probably affiliates of the foreign firms buying the stock.
The Bharti Tele-Ventures scrip surged to around Rs 230 at around 11 am ' soon after the news of the block deals broke ' but the scrip closed lower at Rs 222.15.
State-owned Singapore Telecommunications (Singtel) is a major partner of Bharti and holds close to 16 per cent in the company through its investment arm, Pastel Ltd.
The Warburg deal is the first big-ticket telecom stake sale since February 2 when the government raised the ceiling on foreign direct investment in the telecom sector to 74 per cent from 49 per cent.
'Our sale of $560 million in Bharti Tele-Ventures stock is a continued validation of the growing depth and maturity of the Indian markets,' said Charles R. Kaye, co-president of Warburg Pincus.
'Bharti has become a leading provider of telecommunications services with more than 11 million subscribers and a market cap exceeding $10 billion,' he added.
Bharti group officials were tight-lipped about the stake sale. 'Warburg Pincus invested in Bharti Tele-Ventures in 1999. It is a private equity fund and they have to take a view on their investments. They have been with us for six years and will continue to hold a small stake,' Akhil Gupta, joint managing director of Bharti Tele-Ventures said.
Warburg Pincus was keen to dispel fears that investors were scuttling out of the telecom company. 'Bharti is a compelling growth story and the company continues to attract interest from investors around the world,' Kaye said.
Warburg Pincus still holds 108.1 million of Bharti Tele-Ventures stock, a position that represents 5.8 per cent of the company, Kaye added.
A Bharti spokesperson said, 'This is perhaps the biggest block deal in the history of the Indian equity markets.' The block deal was nearly equal to the average daily value of all shares traded on the BSE. It was also the third sale of the stock in the past seven months by Warburg, which acquired 18.52 per cent of Bharti for about Rs 1305 crore before the company went public in 2002.
Warburg has so far sold a total of about 12 per cent of Bharti Tele-Ventures for over Rs 4450 crore.