Voda Idea raises Rs 5,400 cr from anchor investors, allots 4.9 bn shares | Company News

Vodafone Idea has allotted 4.9 billion shares to anchor investors at Rs 11 apiece—the top end of the price band—to raise Rs 5,400 crore.

A total of 74 different schemes received allotments in the anchor category. US-based GQG Partners subscribed to shares worth Rs 1,347 crore—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.

The allottees were decided after the ‘capital raising committee’ meeting of Vodafone Idea concluded at 11:45 pm on Tuesday.

An anchor allotment is made a day before the follow-on public offering (FPO) opens. As Wednesday is a market holiday, Vodafone Idea’s Rs 18,000 crore FPO—India’s largest ever—will open for subscription on April 18 and close on April 22.

The anchor allotment was the third biggest after Paytm (Rs 8,325 crore) and LIC (Rs 5,627 crore). Of the total anchor book, 16.2 per cent was allotted to five domestic mutual funds through a total of 11 schemes. These mutual funds are HDFC, Motilal Oswal, Quant, Baroda BNP, and 360One.

Market players said the encouraging demand in the anchor category would boost sentiment towards the FPO by the beleaguered telecom player, which has been struggling to stem the loss of subscribers to stronger rivals Reliance Jio Infocomm and Bharti Airtel.

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. The upper end of the price band is nearly 15 per cent below the current stock price.

Of the Rs 18,000 crore, Vodafone Idea plans to spend Rs 12,750 crore on expanding the capacity of 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 GST department.

Axis Capital, Jefferies India, and SBI Capital are the investment banks managing the FPO.

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 the listed firms in the country. This could lead to a long-term overhang in its share price.

Currently, the promoter shareholding in Vodafone Idea is 48.75 per cent. Post the FPO, the promoter shareholding will drop to 36.87 per cent.

Some analysts feel that the fresh capital infusion from the FPOs will allow the company to improve the retention of subscribers. However, others doubt whether 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 Vodafone Idea network and that of its larger peers.

The mobile operator has been consistently making losses for the last eight years and reported a net loss of Rs 29,371 crore and a cash loss of Rs 6,251 crore in the financial year 2022-23. Both these figures had worsened year-on-year. In comparison, it reported a net loss of Rs 23,563 crore and a cash loss of Rs 6,681 crore during the April to December 2023 period (9MFY24).

First Published: Apr 17 2024 | 8:59 AM IST