Vodafone Idea’s Rs 18,000-cr FPO set to open on April 18

Cash-strapped Vodafone Idea Ltd (VIL) on Friday announced a follow-on public offer of up to Rs18,000 crore at a price band of Rs10-11 per share, marking the biggest FPO in the country. The fundraise -- which comes close on the heels of a Rs2,075-crore fund infusion by Aditya Birla group via a preferential share issue earlier this month, would give the ailing telco the firepower to improve its positioning in the Indian telecom market, where it currently trails larger rivals such as Reliance Jio and Bharti Airtel, by a wide margin. The funds would also help VIL shore up finances for the much-delayed 5G rollout and strengthening 4G services, and in payment of vendor dues. VIL has been hemorrhaging subscribers month-after-month, and fighting a desperate battle for survival saddled with debt of Rs 2.1 lakh crore and quarterly losses.

According to a statutory filing on Friday, VIL’s 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 on April 12, 2024 approved the price band for the FPO issuance,” the company said in a BSE filing. Vodafone Idea shares, however, tanked in early trade following the announcement of the Rs18,000-crore FPO.

The floor price for the mega offer has been set at Rs10 and the cap at Rs 11 per equity share. The higher-end of the price band (Rs11) is at a discount of about 26 per cent compared to recently approved preferential issue price to the promoter entity at Rs14.87 and a discount of about 15 per cent compared to last closing price of Rs12.95. A minimum bid lot will be 1,298 equity shares and in the multiples of 1,298 equity shares, thereafter, the company said. The back of the envelope calculations show that at the upper-end of the price band, the minimum application amount would add up to Rs 14,278 for a single lot of shares.”

Pursuant to the approval accorded by the Board of Directors of the company at its meeting held on February 27, 2024 and the special resolution passed by the members of the company on April 2, 2024, the Board has, at its meeting held on April 11 2024, passed resolution for approving, adopting and filing of the red herring prospectus dated April 11, 2024 with the Registrar of Companies, Gujarat at Ahmedabad, in connection with the further public offering of Equity Shares, aggregating up to Rs18,000 crore,” VIL said.

Prior to this, the largest FPO in the Indian market was a Rs15,000 crore share sale by Yes Bank. VIL on Friday 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 blockbuster fundraising plan by the crisis-ridden telco. On April 6, Vodafone Idea board approved raising Rs2,075 crore from promoter Aditya Birla group and increasing its authorised share capital to Rs1 lakh crore.

The Vodafone Idea board had approved issuance of up to 1,395,427,034 equity shares of face value of Rs 10 each at an issue price of Rs14.87 per equity share (including a premium of Rs4.87 per equity share), aggregating to Rs2,075 crore to Oriana Investments Pte. Ltd (Aditya Birla Group entity forming part of the promoter group), on a preferential basis.