Vodafone Idea’s followon share offer for ₹20,000cr. set to hit the market soon
Telecom operator Vodafone Idea’s share sale of ₹20,000 crore through a followon public offer is expected to hit the market within a month, sources said. Roadshows have already drummed up support from institutional investors.
Despite the huge size, investment banking circles said there was sufficient interest to see the entire issue was subscribed.
Fundraise approval
The company’s board approved the proposal to raise funds in February and sought shareholder approval on Monday for the mega issue. The funds will be primarily used to reduce debt and for capex.
Sources said considering the company’s parentage, raising funds should be no problem. In fact, the investment bankers associated with the issue have been hardselling this point since the Aditya Birla group has a credible record in its businesses.
Vodafone Plc. has also been strengthening its balance sheet by divesting ‘valuedestructive’ assets such as its Italian business.
Raising funds is important for Voda Idea, which has been steadily losing market share.
The company is pulling out all the stops to ensure the success of the issue. The ₹25,000crore rights issue in 2019 saw about 71% contribution by the promoters. Both promoter groups have been supporting the Indian subsidiary through periodic fund infusions. The Aditya Birla Group currently owns 18.1%, the Vodafone Group 32.3% and the government of India 33.1% (after converting dues from deferred payments of adjusted gross revenue and spectrum instalments, into equity).
Second effort
This will be Vodafone Idea’s second major fundraising effort in the last four years after the rights issue. In 2022, the promoters infused an additional ₹4,940 crore.
At the end of December 2023, VI ’s gross debt stood at ₹2.15lakh crore of which dues to the government totalled ₹2.1lakh crore and banks and financial institutions ₹7,700 crore.
Rating revision
In August last year, CARE Ratings revised the outlook for its longterm bank facilities and nonconvertible debentures to ‘stable’ from ‘positive’ due to a delay in fundraising from investors and financial institutions.
Voda Idea has been losing subscribers every quarter, and its stock has declined over 16% so far this year.
The telco has also approved a rise in its authorised share capital to ₹1lakh cr. from ₹75,000 crore
Board meet
The board of the company also approved today issuing 139.5 crore shares at ₹14.87 apiece to the Aditya Birla Group for an aggregate of ₹2,075 crore. The preferential issue of shares is to the promoter group entity Oriana Investment Pte, which holds 5.97% stake now, according to an exchange filing.
The telecom operator has also approved a rise in in its authorised share capital to ₹1lakh crore from ₹75,000 crore now. Of the total, ₹95,000 crore will be equity share capital and ₹5,000 crore preference share capital.
The increase in the share capital has been necessitated by the proposed FPO issuance.
(The writer is with The Hindu businessline)