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Vodafone Idea secures Rs 5,400 crore from 60 anchor investors

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In Short:

Vodafone Idea (Vi) raised Rs 5,400 crore from anchor investors, with foreign institutions like GQG Partners, UBS, and domestic mutual funds subscribing to the telco’s anchor book. Vi plans to raise Rs 18,000 crore through India’s largest follow-on public offering (FPO). The company aims to compete with rivals like Reliance Jio and Bharti Airtel by strengthening its network, launching 5G services, and repaying dues. Goldman Sachs estimates Vi needs $8-10 billion for the next two years for network development.

Vodafone Idea Raises Rs 5,400 Crore from Anchor Investors

Vodafone Idea (Vi) successfully raised Rs 5,400 crore from nearly 60 anchor investors on Tuesday, marking it as the third-largest anchor book after One 97 Communications and Life Insurance Corporation.

Anchor Investors

Institutions such as GQG Partners, UBS, Morgan Stanley Investment Management, AustralianSuper, Fidelity, and domestic mutual funds like Quant and Motilal Oswal were among the subscribers to Vi’s anchor book. Over 70% of the anchor investors are foreign institutions.

Rajiv Jain’s GQG Partners applied for over $400 million in Vi’s anchor book across multiple funds.

Follow-On Public Offering (FPO)

Vi is planning to raise up to Rs 18,000 crore through India’s largest FPO, scheduled to open on April 18 and close on April 22. The issue is priced at Rs 10-11 per share, offering a discount of around 26% from the recent preferential issue price.

Financial Health and Future Plans

Vi’s shares, which doubled in the last year, closed at Rs 12.92 after a 1.82% decline on Tuesday. The company aims to strengthen its position in the market with the funds raised through the FPO.

The Indian government holds the largest stake in Vi at over 33%, acquired as part of a previous rescue plan. Analysts estimate a dilution of around 26% with the equity funding of Rs 20,000 crore.

Strategic Investments and Challenges

Vi plans to use the funds for network expansion, debt repayment, and upcoming 5G services launch. However, the company still faces challenges in subscriber retention and financial sustenance against competitors like Reliance Jio and Bharti Airtel.

The company is looking to secure additional funds to meet AGR dues and spectrum repayments, which could pose a cash shortfall in the future if not addressed promptly.

Market Position and Outlook

Vi’s net debt stands at Rs 2.14 lakh crore, with cash reserves at Rs 318.9 crore. The company’s user base has been shrinking, posing a need for strategic initiatives to boost growth and retain market share.

Bankers and Advisors

Axis Capital, Jefferies, and SBI Capital have been appointed as bankers to oversee the public offering and strategic financial decisions.

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