Qatar injects $1.26b in Bharti Airtel.
"Qatar Foundation Endowment (QFE) announced that it has entered into a binding agreement with Bharti Airtel under which Bharti will issue 199.87 million new shares to QFE, representing a shareholding of 5 per cent in the company, post issuance of the new shares," the joint announcement said.
QFE is an investment vehicle of the Qatar Foundation controlled by Shaikha Mozah, the wife of the country's emir.
The move comes a few days after Abu Dhabi-based Etihad Airways announced a $379 million deal to buy a 24 per cent stake in India's Jet Airways and reflects the Gulf country's growing apetite for India's lucrative corporates that promise good return on investment.
Bharti Airtel is aleading global telecommunications services provider with operations in 20 countries across Asia and Africa.
QFE will pay Rs340 per share, a 7.3 per cent premium to the stock's Thursday closing price, amounting to $1.26 billion (Rs67.96 billion).
"The investment will further strengthen the capital structure and provide further flexibility for the Company to deliver on its growth strategy," a statement said.
Rashid Al Nuaimi, Acting Chief Executive Officer, QFE, said, "As a long-term global investor, our shareholding gives us exposure to a high growth sector in key emerging markets."
The total value of disclosed mergers and acquisitions (M&As) in the Middle East and North Africa (Mena) region rose from $7.3 billion in the first quarter of 2012 to $14.6 billion in the first quarter of 2013, increasing by 100 per cent.
The cross-regional investment could grow further due to a better outlook, according to global auditing firm Ernst and Young. "The increased confidence has fostered a strong consensus among global corporates that merger and acquisition (M&A) volumes will increase - 72 per cent expect global deal volumes to rise over the next 12 months," it said in a report last month.
Pip McCrostie, Ernst & Young's Global Vice-Chair, Transaction Advisory Services, says: "Though this positive sentiment would normally translate into significant capital investment and M&A activity, the current situation can best be described as a "confidence paradox" -- with planned activity contradicting expectations. "There are signs of improvement but caution remains. While almost three quarters of corporates expect deal activity in the market to increase over the next year, far fewer have an intention to buy."
The deal will help Bharti to gain exposure to strong investor base in Middle East, in addition to South East Asia. Goldman Sachs acted as sole financial advisor to QFE on this investment.
The company's shares closed 0.3 per cent higher on Mumbais's National Stock Exchange, having risen as much as 4.7 per cent in early trade. The stock has fallen 4 per cent in the last three months.
Sunil Bharti Mittal, Chairman of Bharti, said, "This strategic partnership with QFE demonstrates the confidence they have in the Company and our strategy for growth. In addition, this agreement exemplifies further strengthening of the already deep economic and cultural relations between Qatar and India."
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