Telecom operator Vodafone Ideaâs share sale of â¹20,000 crore through a follow-on 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 of the issue, which will be fresh equity since the company needs the funds, investment banking circles said there was sufficient interest for the entire issue to be subscribed.
The companyâs 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 its debt burden and for capex.
Sources said that considering the companyâs parentage, raising funds would be no problem. In fact, the investment bankers associated with the issue have been hard-selling this point since the Aditya Birla group has a very credible record in its businesses. Vodafone Plc has also been strengthening its balance sheet by divesting âvalue-destructiveâ assets such as its Italian business.
Raising funds is important for the company, which has been steadily losing market share. The company is pulling out all the stops to ensure the success of the issue. The â¹25,000-crore rights issue in 2019 saw around 71 per cent being contributed by the promoters.
Holding pattern
Both promoter groups have been supporting the Indian subsidiary through periodic fund infusions. Aditya Birla Group currently owns 18.1 per cent, Vodafone Group owns 32.3 per cent, and the government holds 33.1 per cent after converting dues from deferred payments of adjusted gross revenue and spectrum instalments, into equity.
This will be Vodafone Idea âs second major fundraising effort in the last four years after the rights issue. In 2022, the promoters infused an additional â¹4,940 crore into it.
At the end of December 2023, the companyâs gross debt stood at â¹2.15 lakh crore, of which dues to the government were at â¹2.1 lakh crore and those to banks and financial institutions were â¹7,700 crore.
In August last year, CARE Ratings revised the outlook for its long-term bank facilities and non-convertible debentures to âstableâ from âpositiveâ due toa delay in fundraising from investors and financial institutions.
It has been losing subscribers every quarter, and its stock has declined over 16 per cent so far this year.
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