Vodafone Idea raises ₹5,400 crore from anchor investors ahead of FPO

Vodafone Idea has raised ₹5,400 crore from close to 74 anchor investors, including GQG Partners, The Master Trust Bank of Japan, UBS, Morgan Stanley Investment Management, Citigroup Global Markets, Australian Super, Fidelity, Quant and Motilal Oswal. Among the investors, GQG has taken close to 26 per cent of the total shares allocated to anchor investors. About 16 per cent of the total allocation to anchor investors was allocated to 5 domestic mutual funds through a total of 11 schemes. This includes the HDFC Large and Mid cap fund and The Baroda BNP Paribas Multi Cap Fund

Vi plans to raise as much as ₹18,000 crore through India’s largest follow-on public offering, which will open on Thursday April 18. The public offer, at a price band of ₹10-11, will conclude on April 22. Vi’s share price on BSE closed at ₹12.92 on Tuesday, which means the FPO is discounted.

 Bids may be placed for a minimum of 1,298 equity shares and, thereafter, for multiples of 1,298 equity shares. The company has reserved 50 per cent of the FPO for the Qualified Institutional Buyers (QIB), 15 per cent for Non-Institutional Investors (NII), and the remaining 35 per cent for retail investors

Fund utilisation

Vi will be using these funds to launch its 5G network. Akshay Moondra CEO of Vodafone Idea noted at the FPO presser on Monday that Vodafone Idea’s 5G network will be launched six to nine months after the fundraise.

• Analysis: Vodafone Idea: Will not flounder, but will it flourish?

Vodafone is the only carrier that does not have 5G services, whereas Jio and Airtel completed their pan India network rollout last year. While customers have not necessarily seen significant evolution in telephony after 5G was launched in India more than a year ago, the lack of 5G services is a noticeable blight on Vi’s network plans. To economise, Vi will also be bringing 5G services for 40 per cent of its subscriber base, unlike the others who claim that their 5G network has a pan-India presence. 

Both, the government and the promoters will see dilution in shareholding post the FPO. While government’s shareholding will go down from 33 per cent to 24 per cent if the FPO is fully realised, promoters’ share will go down from 48.9 per cent in March 2024 to 37.3-38.2 per cent, according to an analysis by Bank of America.

Funds raised from the FPO will have a limited impact on Vi’s gargantuan debt, largely owed to the government, which is close to ₹2-lakh crore. The management was tight-lipped about commitments (if they have made any) to institutional investors regarding spectrum and AGR dues. However, Moondra noted that there is enough headroom for the government to convert its debt to equity, and there is still an 18-month moratorium on AGR dues.