Vodafone Idea’s Rs 25,000-Crore Rights Issue Gets Oversubscribed
Vodafone Idea Ltd.’s rights issue to raise Rs 25,000 crore was oversubscribed before it closed on Wednesday, according to two people privy to the information.
India’s largest telecom operator, which is looking to pare debt of over Rs 1,23,660 crore and create a war chest to take on the newest entrant in the sector, received demand for shares worth Rs 26,950 crore, one of the people cited earlier said, adding that public shareholders put in a demand for shares worth Rs 8,700 crore against an allocation of Rs 6,750 crore, while the promoter groups put in a bid for shares worth Rs 18,250 crore.
Malaysia-based Axiata, one of the large public shareholders in Vodafone Idea, renounced its shares in favour of 20 foreign investors on April 11-12, the person cited earlier said. A total of 182-crore rights issue shares were renounced, according to the data on the BSE.
Due to the oversubscription, both public and promoter portions would be scaled down, the person said. The promoters had earlier committed to subscribe to the unsubscribed portion. However, given the high demand from public shareholders, the promoter won’t have to exercise that option. Grasim Industries Ltd. and Hindalco Ltd. are the two listed Aditya Birla Group companies that hold a stake in Vodafone Idea.
The proposed fund infusion will lower the wireless operator’s leverage ratio to 26.5 times its earnings before interest, tax and depreciation and amortisation, according to BloombergQuint calculations. That’s still higher than that of Bharti Airtel Ltd. and Reliance Jio Infocomm Ltd. The fundraise could reduce Vodafone Idea’s debt by 20.2 percent, according to BloombergQuint estimates.
This is the second fund infusion by promoters to pare debt. Earlier this year, the promoters—Vodafone Plc and Aditya Birla Group—infused close to Rs 14,140 crore in their respective telecom operations to pare debt for the merger to go through.
Vodafone Idea is also looking to sell its non-core assets—fiber and stake in Indus Towers—to cut debt. While the value of its 1,58,000-kilometre of fiber network isn't known, its stake in Indus Towers could fetch anything close to Rs 5,000 crore.
The fundraise will be adequate for only two years beyond which it will again need to raise funds, the people cited earlier said.