Bharti Group has secured approximately $1.8 billion from Barclays to facilitate its planned acquisition of a 24.5% stake in the UK’s BT Group, according to sources familiar with the situation. Additional funding from various international banks may be pursued depending on the group’s need for further debt to complete the deal, these sources indicated.
The initial 9.99% stake in BT is being acquired through an open market transaction by Bharti Global, the international division of Bharti Enterprises, via Bharti Televentures. The acquisition of the remaining 14.51% is contingent on obtaining the necessary regulatory approvals.
Bharti is purchasing this stake from BT’s largest shareholder, Altice UK. The announcement of the stake purchase has led to a more than 10% increase in BT’s stock, bringing its market capitalization to $18.55 billion. Depending on the valuation, Bharti plans to use a combination of cash and debt to finance the rest of the transaction, which may take additional time.
A subsidiary of Bharti Enterprises (Holding) Ltd, Bharti Enterprises Ltd, has accessed external debt, with adequate liquid assets to maintain a negligible net debt position, according to a March report from a rating agency. As of March 20, Bharti Telecom, the holding company of Bharti Airtel, had external debt amounting to Rs 24,950 crore, while the market value of its investments was Rs 2.75 lakh crore, providing a substantial financial cushion.
While the transaction is still in its early stages, there may be challenges related to the pricing of the remaining loan and the spread over the secured overnight financing rate (SOFR), based on preliminary discussions between Bharti and the banks, according to one of the sources, who requested anonymity.
Earlier this week, Bharti Group released a statement clarifying that it has no intention of making a bid for control of BT, Britain’s largest broadband and mobile provider. Bharti is not seeking a board seat either, as confirmed by chairman Sunil Mittal. Funding for the transaction is being managed by Bharti Global, with Barclays serving as the financial adviser and providing some immediate capital. Mittal expects the deal to be finalized in the coming months.
