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Bharti Airtel’s Rs 21,000 cr rights issue opens next month; check record date for massive fund-raise

Since Bharti Airtel announced its Rs 21,000 crore rights issue the stock has jumped more than 17%.
(Image: REUTERS)

Bharti Airtel’s massive Rs 21,000 crore rights issue will open for investors on October 5 and close on October 21, the company said in a regulatory filing on Wednesday. Telecom major Airtel is looking to raise funds to accelerate investment mainly in the mobile business as it looks to expand its market share. The company is also looking to use these funds to roll out 5G, fibre backhaul, and step up data centre investments. The record date for the rights issue has been set as September 28. Bharti Airtel had announced the Rs 21,000 crore right issue last month. Bharti Airtel stock is trading with gains today, hitting an intra-day high of Rs 735 per share.

Bharti Airtel Rights Issue: All you need to know

-Bharti Airtel’s Board of Directors on Wednesday approved selling upto 39,22,87,662 Rights Equity shares for an amount aggregating upto Rs 20,987.39 crores.
-Investors can subscribe to the Rights Issue at a fixed price of Rs 535 apiece, a 37% discount to the current price of Bharti Airtel’s shares.
-At the time of application to the Rights Issue, investors will have to only pay an amount of Rs 133.75 per share while the remaining Rs 401.25 will be collected in two separate instalments.
-The company has decided on a rights entitlement ratio of 1:14. Hence, investors will be eligible for 1 rights entitlement for every 14 equity shares of Bharti Airtel.
-Bharti Airtel’s promoters will also subscribe to the rights issue of the company and will bid for any unsubscribed portion of the issue.
-Similar to the Reliance Industries rights issue, the shares issued to investors in the Bharti Airtel issue will be converted to partly paid-up shares and listed on the bourses separately.

Rights entitlement

For investors who do not exercise their rights entitlement, the same could be offloaded in the Rights Renunciation window which normally opens for trading in a week post the record date, Abhilash Pagaria of Edelweiss Alternative Research said in a note earlier. Rights Entitlement (RE) are issued in a similar ratio to the rights issue to eligible investors. SEBI allows investors to trade their RE for a price.

Earlier this year, Zerodha’s Nithin Kamath told Financial Express Online that customers of the discount brokerage firm lost Rs 10 crore in expired Rights Entitlements by not applying for shares. The price of the RE is determined by the market based on the discount from the current market price of the security.

Airtel share price performance

Since Bharti Airtel announced its Rs 21,000 crore rights issue the stock has jumped more than 17% to now trade at Rs 735 per share, up from Rs 600 at the end of last month. Analysts had reiterated positive calls for Bharti Airtel after the rights issue announcement. Domestic brokerage and research firm ICICI Direct had advised investors to buy Bharti Airtel and also subscribe to the rights issue of the company.

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