Vodafone Idea has set the price band for the FPO at Rs 10-11 per share. Shares of Vodafone Idea last closed at Rs 12.9, down 1.9 per cent from its previous close | (Photo: X@VodaIdea_NEWS)
Vodafone Idea has raised Rs 5,400 crore by allotting 4.9 billion shares to anchor investors at Rs 11 apiece, the top end of the price band.
The anchor allotment was the third-biggest, after Paytm at Rs 8,325 crore and LIC at Rs 5,627 crore.
A total of 74 schemes received allotments in the anchor category, with US-based GQG Partners subscribing to Rs 1,347 crore worth of shares, nearly a quarter of the available shares in the anchor category. Other large subscribers included Fidelity, Stichting, Redwheel, Motilal Oswal Mutual Fund, and Troo Capital.
Sources said the demand in the anchor investor category was between 2x and 3x more than shares on offer. “The higher demand will spill over onto the main book,” said a banker handling the share sale. He added that GQG is likely to invest more in the main book as well.
As per initial reports, GQG was eyeing an investment of over Rs 4,000 crore in the Vodafone Idea FPO.
The allottees were decided after a meeting of the ‘capital raising committee’ of Vodafone Idea at 11:45 pm on Tuesday.
As Wednesday is a market holiday, Vodafone Idea’s Rs 18,000 crore FPO, India’s largest ever, will open for subscription on Thursday and close on Monday. Axis Capital, Jefferies India, and SBI Capital are the investment banks managing the FPO.
Of the total anchor book, 16.2 per cent was allotted to five domestic mutual funds, HDFC, Motilal Oswal, Quant, Baroda BNP, and 360One, through 11 schemes.
Market players said the encouraging demand seen in the anchor category would boost sentiment ahead of the beleaguered telecom player’s FPO. The company has been struggling with loss of subscribers to stronger rivals Reliance Jio Infocomm and Bharti Airtel.
Vodafone Idea has set the FPO price band at Rs 10-11 per share. The Vodafone Idea stock ended at Rs 12.9 on Tuesday, down 1.9 per cent from its previous close. The upper end of the price band is nearly 15 per cent below the current stock price.
Of the Rs 18,000 crore expected to be raised, Vodafone Idea plans to spend Rs 12,750 crore on expanding the capacity of its existing and new 4G sites and setting up new 5G sites. About Rs 2,175 crore will be spent on deferred payments for spectrum to the Department of Telecommunications and the goods and services department.
The FPO will also increase the company’s paid-up capital to nearly Rs 65,000 crore and the number of outstanding equity shares to 65,000 million — both highest among listed firms in the country. This could lead to a long-term overhang in its share price.
After the FPO, the promoter shareholding in Vodafone Idea, currently at 48.75 per cent, will drop to 36.87 per cent.
Some analysts feel that the fresh capital infusion from the FPO will allow the company to improve the subscriber retention. However, others doubt if Rs 18,000 crore will be sufficient, given the company’s accumulated losses of nearly Rs 1.4 trillion and the substantial capital needed to bridge the growing capability gap between the network of Vodafone Idea and those of its larger peers.
The mobile operator has consistently reported losses in the past eight years, with its net loss and cash loss in 2022-23 standing at Rs 29,371 crore and Rs 6,251 crore, respectively. Both these figures worsened on a year-on-year basis. By comparison, it reported a net loss of Rs 23,563 crore and a cash loss of Rs 6,681 crore during the April-December period of 2023-24.
First Published: Apr 17 2024 | 8:59 AM IST