* Stock falls as much as 12.7 pct on trading debut
* Tower operators' outlook clouded by revoking of cellular
* Bharti Infratel IPO was India's biggest in two years
By Devidutta Tripathy
NEW DELHI, Dec 28 Bharti Infratel Ltd,
backed by billionaire Sunil Mittal, fell as much as 12.7 percent
in its trading debut after raising about $760 million 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 price
range, struggled to find interest from retail investors and was
supported mostly by foreign institutional investors. But
analysts are betting on a revival in India's initial public
offerings on the back of a recent stock market gains.
Bharti Infratel, a unit of top Indian mobile phone
carrier Bharti Airtel Ltd and partly owned by KKR & Co
Ltd, was trading at 197.20 rupees as of 0434 GMT on the
National Stock Exchange.
That was down 10.3 percent from its IPO price of 220 rupees
for funds and wealthy investors, who received the majority of
the allocation. Bharti Infratel sold shares to retail investors
at 210 rupees and to cornerstone investors at 230 rupees.
The IPO also gave funds including Singapore state investor
Temasek Holdings and the private equity arm of Goldman
Sachs Group Inc an opportunity to cash out of some of
their early investments.
The listing comes amid an IPO revival in India after a tepid
first half. Credit Analysis and Research Ltd
and PC Jeweller Ltd also made their debut
this week after raising around $100 million each.
The biggest initial share sale since Coal India Ltd
raised $3.5 billion in 2010 pushed India's IPO volume
to $1.28 billion this year, shy of last year's tally of $1.36
billion, according to Thomson Reuters data. But that is well
short of the record set in 2007, when Indian corporates raised
$8.65 billion through IPOs.
India's IPO volumes are expected to improve further on
rising foreign capital inflows. Several high-profile deals
including the listing of Bombay Stock Exchange and the potential
IPO of Vodafone Group Plc's India unit are likely to hit
as earlier as next year, bankers said.
The broader NSE index has surged about 28 percent
this year, and is Asia's third best-performing market, according
to Thomson Reuters data.
But weighing on the outlook for mobile tower operators, an
Indian court this year revoked permits of several wireless
carriers while demand growth for third and fourth-generation
mobile data services slowed.
Shares of GTL Infrastructure Ltd, the only other
mobile tower operator listed in India, have slumped 90 percent
in the last two years, hit by debt repayment worries.
Bharti Infratel priced its IPO at lower valuations to
overcome those concerns, attracting more than a dozen
cornerstone investors including units of Morgan Stanley
and Citigroup Inc.
The IPO valued Bharti Infratel at a 35 percent discount to
peers in the United States and Indonesia with an enterprise
value over EBITDA metric, or earnings before interest, tax,
depreciation and amortisation, said Nomura analysts.
But on a price-to-earnings basis, Bharti's valuation implied
a 20 percent premium to global peers, Nomura said.
Bharti Infratel sold about 146 million shares, or more than
three quarters of the shares on offer, while four of its private
equity investors, including the arms of Temasek Holdings and
Goldman Sachs, sold a total of 42 million shares.
Bharti Airtel, which owned 86 percent of the tower operator
before the IPO, did not sell any shares in the process.
The IPO was mainly supported by foreign institutional
investors, with the company receiving bids for less than a fifth
of shares on offer for local retail investors.
Bharti Infratel has about 34,000 towers and owns 42 percent
of Indus Towers, the world's largest tower operator. Along with
Indus, Bharti Infratel has a 38 percent share of the Indian
telecommunications tower market.
Bank of America Merrill Lynch, Barclays,
Deutsche Bank, HSBC, JPMorgan,
Standard Chartered, and UBS were the foreign
banks underwriting the IPO, while India's Kotak Mahindra
and Enam Securities were the domestic banks handling
the share sale.