The Foreign Investment Promotion Board (FIPB) today cleared the Bharti Televentures proposal to float an initial public offer (IPO), paving the way for the company to meet the January 31, 2002 deadline for stock exchange listing.
The FIPB recommended the case for clearance by the ministry of commerce and industry.
Subsequently, it will require the nod from the Cabinet Committee on Economic Affairs (CCEA) as the project cost is more than Rs 600 crore. The case came up for consideration today, two weeks after the board deferred a decision as the finance ministry was not ready with its comments.
Official sources said the finance ministry had sought more information to verify that it was not a case of round-tripping (routing domestic investment as FDI through an overseas subsidiary to avoid taxes). Since Bharti had already brought in part of the foreign direct investment (FDI) via its overseas subsidiaries, it was decided to give the case a go-ahead.
The finance ministry was also of the opinion that the FDI cap of 49 per cent will not be breached in case of an IPO. It was also felt that the public issue might actually help revive the stock markets. Bharti Tele is diluting 10 per cent of its equity constituting 18.5 crore equity shares in the primary market. The company will also offer employee stock options to 4,000 employees at 50 per cent discount to the IPO price.
Bharti Televentures has decided to set aside around 54 per cent of the IPO, around Rs 452.04 crore, for foreign institutional investors (FIIs), non-resident Indians (NRIs) and overseas corporate bodies (OCBs).
Sources said that post-IPO, the paid up capital of the company will go up from Rs 1,668.03 crore to Rs 2,500 crore. Foreign holdings (including NRIs/OCBs and FIIs investment) will increase from Rs 772.96 crore to Rs 1,225 crore. This implies that foreign shareholding in the company, currently at 46.33 per cent, will touch the FDI ceiling of 49 per cent.
The FIIs/NRIs and OCB investors who are likely to subscribe to the equity shares will include Brentwood Investments (a subsidiary of Warburg Pincus), Palmobile Corporation, India Continent Investment Ltd and Seejay Cellular (both Bharti group overseas subsidiaries), Russel AIF India Telecom (Asia Infrastructure Fund), New York Life International India Fund and IFC Washington. All these entities already hold shareholding in Bharti Televentures.
