Vodafone Idea Limited has recently hit headlines of the financial corners of the newspaper as it paid a whopping Rs. 287 crores to three investment bankers – Axis Capital, Jefferies, and SBI Capital Markets who managed the Rs. 18,000 crores share sale. This has come as the follow-on public offer (FPO) which has been a sigh of relief for the otherwise dwindling telecom operator, as the chairman called it a “fresh lease of life”. The firm has confirmed in its final prospectus that it has renumerated 287 crores as its book running lead manager (BRLM) fees which is 1.6 percent of its issue size.
Vodafone pools a massive fundraise
On Thursday, April 22, the struggling and weakening telecom services raised a gigantic Rs. 18,000 crores in India’s largest ever follow on offering (FPO). In accordance with the data showcased by the stock exchange, the issue was subscribed nearly 7 times after the investment bankers pooled in money.
The company collected Rs. 5,400 crores from anchor investors after issuing 490 crores shares, which contributed to the recent profit of Rs 12,600 making the company raise the targeted Rs. 18000 Crore.
During the closure of the offering, a heavy number of nearly 8,011.29 crore shares were bought, which was 6.99 times the size of the company’s issue.
The company collected Rs. 5,400 crores from anchor investors after issuing 490 crores shares, which contributed to the recent profit of Rs 12,600 making the company raise the targeted Rs. 18000 Crore. The company received a total number of bids of Rs. 88,124 crores but as per its FPO offer size, will only retain Rs. 12,600.
As per the share sale prospectus, from the total FPO that the company has mustered, the company has decided to use Rs 12,750 crore for the purchase of the equipment needed for the expansion of its network infrastructure by setting up new 4G sites and also by expanding the capacity of existing 4G sites. It has also aimed to set up new 5G sites in FY25.
It has willed to spend Rs 5,720 crore of the Rs 12,750 crore kept aside for the network expansion, on setting up its 5G network. It will use Rs 2,175.31 for making deferred payments for spectrum. The remaining part of the FPO proceeds will be utilized by the company for various general corporate purposes such as the requirements of funding working capital.
Vodafone gives a stiff competition to others in race
As stated by the PRIME Database, the BRLM fees paid by the firm is the second highest for a domestic FPO. On the first position is the One 97 Communication (Paytm) which renumerated around Rs. 324 crores as BRLM fees for its Rs.18,300 crore IPO in November 2022.
Such a colossal deal is normally signed by at least six bankers on board but this deal as said before will be distributed among three major institutional investors. Paytm had appointed seven investment bankers for their IPO.
Combining both IPOs and FPOs, the deal was the third largest and the company’s FPO was the largest ever in the domestic market. Above them stand the IPOs of LIC at the first position with Rs. 20,557 crore and Paytm at second with IPO at 18, 300. The VIL FPO has successfully surpassed the YES’s Bank’s FPO of 15,000 crores in 2020.
Here’s what Birla said about the company’s achievement:
The chairman of Aditya Birla Group – Kumar Mangalam Birla has termed this accomplishment as a ‘turning point’ for the telecom company. “This moment in some ways marks the beginning of Vodafone Idea 2.0. I believe that a revitalized Vodafone Idea is important for India,” Birla said. As mentioned above, he also called this a ‘fresh lease of life.”
About the heavy numbers of investors, he said, “The robust engagement from both foreign and domestic investors is heartening. The full subscription of the retail portion is truly commendable, given the sheer scale of the offer”.
“The fact that so many marquee investors participated in this equity issuance is a testament to the government’s vision of a digital India” he added.
He also showed gratitude to the investment bankers as he stated, “On the back of this fundraise and continued support from banks, Vodafone Idea will stage a smart turnaround. This moment in some ways marks the beginning of Vodafone Idea 2.0. I believe that a revitalized Vodafone Idea is important for India”.
“A rejuvenated Vi together with other telecom players will meaningfully contribute to the exciting and sustainable growth journey ahead,” Birla said speaking about the company’s prospect.
