Vodafone Idea raises crucial funds through India's largest FPO
Vodafone Idea, a prominent telecom service provider currently facing challenges, has successfully concluded its ₹18,000 crore follow-on public offer (FPO), setting a new record as the largest FPO in Indian history. The offering was oversubscribed seven times, indicating substantial interest from global institutional investors. The portion set aside for qualified institutional buyers (QIBs) was subscribed 19.3 times, with foreign institutional investors (FIIs) accounting for 82% of the bids.
Retail segment fully subscribed to the offer
Non-institutional investors (NII) also demonstrated significant interest, bidding for 4.5 times the shares allocated to them. The retail segment fully subscribed to the offer as well. Prominent FIIs such as GQG, Capital Group, Morgan Stanley, Fidelity Investments, Blackrock, and Citadel participated in the three-day bidding period. "Vi appears to have succeeded with its current equity fund-raise with backing of a wide gamut of QIBs," said Vivekanand Subbaraman, an analyst at Ambit Capital.
The FPO is a crucial part of a larger funding
The FPO is a crucial part of a larger ₹45,000 crore funding initiative that is essential for the company's survival. The Indian government currently holds more than 33% stake in Vi, acquired as part of a previous rescue plan in exchange for dues. However, this stake is expected to drop to 23% as the government did not participate in the FPO.
Vodafone Idea has raised ₹5,400 crore from anchor investors
Last week, Vodafone Idea managed to raise ₹5,400 crore by allotting 491 crore shares to 74 anchor investors at ₹11 per share. This included foreign institutional investors like UBS and AustralianSuper along with domestic mutual funds such as HDFC and Motilal Oswal. Earlier this month, the company's board approved a preferential share issue to raise ₹2,075 crore from an Aditya Birla Group entity, Oriana Investments Pte Ltd.
The funds will be used to settle dues, enhance network
The broader ₹45,000 crore funding initiative, which includes ₹25,000 crore of debt, is aimed at enabling the telecom company to compete effectively against rivals like Reliance Jio and Bharti Airtel. The funds raised will be utilized to settle dues with vendors like Indus Towers, enhance its 4G network and finance the launch of 5G services. The company aims to roll out 5G services in six to nine months, focusing on regions that contribute about 40% of its revenue.
