Vodafone Idea (VIL) announced India’s largest follow-on public offer on Friday with a Rs 18,000-crore float that opens on April 18 as the telco plays catch-up with Bharti Airtel and Reliance Jio.
VIL could use the funds to clear its dues, strengthen its 4G network and venture into 5G services.
Following this share sale, the company is planning to raise Rs 25,000 crore through bank debt.
Earlier, the largest FPO was from Yes Bank which mobilised Rs 15,000 crore in 2020.
VIL said in a regulatory filing that the shares will be issued in a price band of Rs 10-11 per share, against Friday’s closing price of Rs 12.96 on the BSE.
The upper end of the band is nearly at a 15 per cent discount to the closing price of Rs 12.93 on Thursday.
The company disclosed the follow-on offer will open on April 18 and close on April 22. ``The Board of Directors of the company, at its meeting held on April 11, 2024, approved further public offering (FPO) of equity shares, aggregating up to Rs 18,000 crore.
“The capital raising committee in its meeting held today that is April 12, 2024, approved the price band for the FPO issuance,” VIL said in a stock exchange filing.
Following the announcement, analysts at Citi said in a note that the completion of the Rs 45,000-crore fundraise should enable VIL to ramp up network capex and narrow the gap with peers on 4G coverage and 5G rollouts.
“Combined with potential tariff hikes after elections and the possibility of AGR (adjusted gross revenue) relief (matter pending in Supreme Court), this should significantly boost VIL’s cash flow position,” Citi said.
“It may, however, still face a cash shortfall from the second half of 2025-26 once the ongoing moratorium on Government’s AGR & spectrum repayments ends, unless the government exercises the option to convert these dues into equity — this remains a key uncertainty from both a cash flow and an equity dilution perspective.’’
VIL shares initially came under pressure after the FPO announcement. It, however, bounced back to close with gains.
On the BSE, the scrip hit a day’s low of Rs 12.23 and it later ended at Rs 12.96, marking a gain of 0.23 per cent over the last close.
Investors will have to bid for a minimum lot of 1,298 shares and in multiples thereafter. At the upper end of the price band, the minimum application amount would come to around Rs 14,278 for a single lot.
VIL said it will be participating in road shows and interacting with investors and analysts in various cities across India from the week of April 15, 2024, up to the bid closing day.
The board has also fixed the anchor investor bid/offer period to be April 16, 2024.
The recent preferential issue of VIL has been a precursor of sorts to this mega fundraising plan by the crisis-ridden telco.
On April 6, Vodafone Idea board approved raising Rs 2,075 crore from promoter Aditya Birla Group and increasing its authorised share capital to Rs 1 lakh crore.
