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Business News/ Markets / Ipo/  Vodafone Idea FPO booked 26% on day 1 led by QIBs
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Vodafone Idea FPO booked 26% on day 1 led by QIBs

Vodafone Idea FPO witnesses strong interest from QIBs on the first day, while retail segment lags. The company has already raised ₹5,400 crore from anchor investors in the country's largest FPO.

Vodafone Idea FPO date of subscription is scheduled to open today (Thursday, April 18) and will close on Monday, April 22.Premium
Vodafone Idea FPO date of subscription is scheduled to open today (Thursday, April 18) and will close on Monday, April 22.

Vodafone Idea’s follow-on public offer (FPO), which opened for public subscription on Thursday, was subscribed 26% on the first day of the share sale, primarily led by qualified institutional buyers (QIBs) and non-institutional investors.

The issue received bids for about 3.31 billion shares, against 12.60 billion shares on offer.

At the end of the day, the QIB quota had 61% subscriptions, the non-institutional investor category had 28% subscriptions while retail investors had bid for only 6% of the shares reserved for them, BSE data showed. Stock of Vodafone Idea (Vi) closed 2.17% higher at 13.20 on the BSE.

The company aims to raise 18,000 crore in the country's largest FPO, which will close on 22 April. The FPO has been priced at 10-11 per share, and the country's third-largest telecom operator will use the proceeds to expand its 4G services, and launch 5G operations.

Vodafone Idea has raised about 5,400 crore in its follow-on public offering from anchor investors including GQG Partners, Fidelity Investments, UBS Fund Management, Jupiter Fund Management, and Australian Super.

Also Read: Vodafone Idea FPO: 10 key things to know about 18,000-crore issue as anchor book opens today

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Vodafone Idea FPO details.
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Vodafone Idea FPO details.

Vodafone Idea FPO GMP or grey market premium is 1.55. The fresh shares being issued under the FPO will likely be listed at 12.55, representing a gain of 14% over the upper limit of the price band, according to investorgain.com.

The FPO GMP trend shows no significant change, and is consistent with the previous seven sessions' grey market activities. This pattern is expected to continue until the final day. Grey market premium indicates investors' readiness to pay more than the issue price.

Also Read: Vodafone Idea FPO opens today. Should you bid? Here's what GMP, experts say about the 18,000-crore issue

Vodafone Idea chief executive officer and managing director Akshaya Moondra told Mint on Wednesday that the cash-strapped telco will use the proceeds for financing equipment for expansion of its 4G network and setting up its 5G network. About 12,750 crore will be used for new 4G sites, augmentation of capacity at both existing and new 4G sites, and towards new 5G sites. A pportion of the FPO funds will also go towards deferred payments for spectrum to the government amounting to 2,175 crore and for general corporate purposes.

Vendor dues and government dues will be paid from internal accruals and not from the proceeds of the FPO, Moondra has clarified. He added that the carrier has 18 months to settle as many dues on a monthly basis as possible before the moratorium on deferred payments to the government for spectrum bought in previous auctions and the adjusted gross revenue (AGR) dues comes to a close. The government could opt for equity conversion of the dues even as promoters could consider adding more equity at that time, he said.

The telco is burdened with a 2.1 trillion debt, including over 1.3 trillion owed for spectrum to the government, and 65,000 crore in AGR dues, again to the government. The debt is payable over the years up to 2040-41.

Also Read: Vodafone Idea FPO: Shares jump 4% after rise in GMP. Should you apply?

Once the FPO closes, the telco will then reach out to banks for raising debt which will be the second leg of its 45,000 crore fundraise exercise, which is expected to close by June.

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ABOUT THE AUTHOR
Gulveen Aulakh
Gulveen covers both corporate and economy, and policy sections of Mint. She also covers telecom, IT from the corporate side and disinvestment, finance ministry from the economy side. Gulveen finds the rare mix of sectors she covers to be incredibly interesting.
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Published: 18 Apr 2024, 05:40 PM IST
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