Vodafone Idea to launch FPO next week, targets raising up to ₹20,000 crore: Reports

Vodafone Idea, India's third major telecom sector player, is looking to raise ₹18,000 crore to ₹20,000 crore via a follow-on public offer (FPO), reports said on Wednesday, April 10, citing sources. The issue is likely to be launched in the middle of next week, the reports added.

The news comes four days after the board of Vodafone Idea gave its nod to raise ₹2,075 crore from Oriana Investments Pte Ltd, an arm of promoter entity Aditya Birla Group, on a preferential basis.

During the intraday trade on April 10, Vodafone Idea’s shares were edging lower. After the report related to the planned FPO was out, the shares briefly gained as against the previous day’s close.

The stock peaked to ₹13 on the National Stock Exchange (NSE) at 12:35 pm, marking a climb of 0.7%. The gains were shortly pared, and at 2:25 pm, the shares were down 0.7% at ₹12.8.

The planned FPO to raise up to ₹20,000 crore, as claimed in the reports, would be the largest offering of its kind in the Indian market. The biggest FPO so far was launched by Yes Bank in July 2020 to raise ₹15,000 crore.

Adani Enterprises' planned FPO of ₹20,000 crore last year would have surged past the issue size of Yes Bank's 2020 offer. However, the FPO was called off by the conglomerate following a damning report released against it by the US-based activist-short seller Hindenberg Group in January 2023.

Vodafone Idea FPO: What we know so far

Since the telco is yet to officially confirm its FPO plans, there are no details publicly available. However, Moneycontrol learnt from persons privy to the development that the telco has tapped Jefferies, SBI Capital and Axis Capital as lead managers for the planned FPO. These entities, however, are not underwriting the issue, the report added.

The fundraise, according to the publication, has been backed by the Government of India, which is the largest shareholder in Vodafone Idea with a 33% stake.

Before launching the FPO, the company has shored up support from foreign and domestic institutional investors, the report said, citing the sources. The telco has secured commitments from anchor investors, it added.

According to the Economic Times, the planned FPO has been priced at a "significant discount" as compared to the price of ₹14.87 a share, that was set while raising funds from one of the promoters.

The developments could not be independently verified.

Notably, Vodafone Idea is seen to be struggling in the Indian telecom market that is dominated by Reliance Jio and Bharti Airtel. At the end of February 2024, its subscriber base stood at 220.5 million, down 1 million as compared to the preceding month.