In a huge block deal, private equity fund Warburg Pincus sold 6% of its stake in Bharti Tele-Ventures for $561m or about Rs 2,500 crore. At 110m shares, it was the biggest-ever block deal executed on Indian stock exchanges.

According to market sources, US-based Capital International is one of the main buyers, and its various funds have picked up over half the 11.2 crore shares, according to sources. The other buyers are Fidelity, another FII and the Government of Singapore, according to information available with market sources.

In all, there are 11 buyers, sources said. The deal was arranged by UBS Securities, which advised Warburg Pincus and was the broker.

About 11.2 crore shares were sold in two blocks of Rs 218 per share and Rs 223.90 per share on the BSE. The block deal size is close to the average daily value of all shares traded on the BSE.

Akhil Gupta, joint MD, Bharti said, “Today's deal of $560m is the biggest-ever in India's history. It reflects the interest in India's telecom sector and Bharti. It is also a strong reflection of the depth of the Indian stock exchanges.''

After the sale, Warburg continues to hold about 6% in Bharti. The private equity investor, has been one of the original investors in Bharti since 1999. Singapore Telecom invested in Bharti in ‘01 and currently holds a 28% stake

With this sale, Warburg has made over $1bn on the original investment of $300m in Bharti. Warburg originally had an 18.5% stake in Bharti, which was reduced in two deals. The private equity investor first sold about 3.35% stake for $208m in August '04 at Rs 155 per share. Subsequently, in early February, it sold another 3.3% for $310m in a block deal at Rs 216 per share.

Bharti's share price has jumped almost five-fold since its listing in ‘02 at Rs 45 per share. At a time when India has been witnessing unprecedented growth in mobile telephony, Bharti is the only listed private sector cellular company in the country.

The Bharti price opened at a high of Rs 218 before touching a high of Rs 234 and closing at Rs 222.15 on the Bombay Stock Exchange today.

The Reserve Bank of India (RBI) on Monday announced that foreign funds could not buy any more shares of Bharti since foreign ownership in Bharti has reached the 48% trigger level after the Warburg deal.

The government has raised the cap on FDI in the sector to 74% from 49% in January, but this is yet to be notified.

While Bharti Telecom holds 46.4% in Bharti Tele-Ventures, Pastel and Brentwood hold over 15% each. Bharti is one of India's largest private sector providers of telecom services, with about 10.6m customers as of December-end ‘04, comprising about 9.8m mobile customers.

Bharti chairman and MD Sunil Mittal had sold his entire personal stock in Bharti Tele-Ventures a few days ago, though he continues to hold a controlling stake in the company via Bharti Telecom. This move was attributed to his personal commitments and his personal portfolio management.