NEW DELHI/HONG KONG: Bharti Infratel Ltd, backed by billionaire Sunil Mittal, dived as much as 12.7 percent in its trading debut after raising about $760m in India’s biggest IPO in two years, weighed down by a cautious outlook for mobile tower operators.
The IPO, priced near the lower end of an indicative range to ensure success, struggled to find interest from retail investors and was supported mostly by overseas institutional buyers, a key pillar in the Indian stock market.
Bharti Infratel’s poor trading debut is unlikely to deter future offerings in India, bankers said, with strong foreign fund bids expected to underpin the share market.
“It’s early days and the stock should settle in the course of the next day or two. If the foreign flows continue, the market will remain buoyant which should translate into more deals,” a person familiar with the Bharti Infratel IPO said. “If not IPOs, there should be more follow-on offerings.”
Already, privately owned Axis Bank Ltd has announced plans to raise fresh equity capital, and the source said a possible listing of National Stock Exchange is among the other IPOs that investors can expect.
Bharti Infratel’s listing follows a tepid first half in IPO deals, and is the biggest after state-run Coal India’s $3.5bn issue in 2010.
The listing pushed India’s IPO volume to $1.28bn this year, shy of last year’s $1.36bn, according to Thomson Reuters data. But that is still short of the record set in 2007 when Indian corporates raised $8.65bn through IPOs.
IPO volumes are expected to improve further on rising foreign capital inflows. Several high-profile deals including the potential IPO of Vodafone Group Plc’s India unit are likely to hit as earlier as next year, bankers said.
Including follow-on share offers, share sales volumes in India jumped 70 percent from a year earlier to $14.8bn, according to Thomson Reuters data.
The market will likely remain busy in 2013 with two large share sales in state-run Oil India Ltd and NTPC Ltd set to come in the next few weeks as part of the government’s plan to raise around $5.5bn by exiting part of its stakes across a slew of companies.
“The quality of companies do matter a lot. Investors are latching on to good quality names or where corporate governance and business risks are far lower,” said Dhananjay Sinha, the Mumbai-based co-head of institutional research at Emkay Global Financial Services.
Bharti Infratel, a unit of top Indian mobile phone carrier Bharti Airtel Ltd and partly owned by KKR & Co Ltd, was at RS192.70 as of 0655 GMT on Friday.
That was down 12.4 percent from its IPO price of Rs220 for funds and wealthy investors, who received the majority of the allocation. Bharti Infratel sold shares to retail investors at Rs210 and to cornerstone investors at Rs230.
The broader NSE index, which has surged about 28 percent this year and is Asia’s third best-performing market, was up 0.5 percent. Bharti Infratel’s share performance was poor compared with the surge in shares of Credit Analysis and Research Ltd and PC Jeweller Ltd.
Reuters
