Vodafone Idea has pulled in funds worth Rs 5,400 crore from 74 anchor investors, reveals the company’s communique on Wednesday. Investors like GQG Partners, The Master Trust Bank of Japan, UBS, Morgan Stanley Investment Management, Citigroup Global Markets, Australian Super, Fidelity, Quant, and Motilal Oswal participated in the fundraiser.
The beleaguered telecom company set Rs 11 per share price for allocating 491 crore shares to anchor investors.
Anchor Investors:
The larger chunk, reckoning 26 percent of the total shares allocated to anchor investors, has gone to US-based GQG Partners. In figures, shares worth Rs 1,345 crore.
Fidelity Investments injected Rs 772 crore in the Follow on Public Offer. Troo Capital and Australian Super would be putting in Rs 331 crore and Rs 130 crore, respectively.
About 16.2 percent of the total allocation to anchor investors, summed to Rs 874 crore, went to five domestic mutual funds, with Motilal Oswal Midcap Fund pouring in Rs 500 crore.
Who Are Anchor Investors?
Anchor investors are generally large institutional buyers like investment management firms, foreign institutional investors, mutual funds, or sovereign wealth funds. They commit to buy a slice of shares offered in an IPO or FPO upfront. Their allotment of shares happens at a fixed price a day before the public issue. Interests taken by anchor investors in a specific public offer somewhat steers the retail investors’ confidence and creates demand, as it is believed that the big institutions are bidding their money after a well-researched strategy.
Vodafone Idea FPO Details:
Vodafone Idea is eyeing raising Rs 18,000 crore through their follow-on public offering, opening on Thursday, April 18.
It will be entirely an offer consisting of a fresh issue of shares. 50 percent of the quota is for qualified institutional buyers, 15 percent for non-institutional investors, and the rest of 35 percent lies with retail investors.
The price band has been set at Rs 10-11. The offering will close on April 22.
The telecom company plans to use the proceeds to back new 5G sites, scale up the 4G network, and defer spectrum payments, per its red herring prospectus (RHP).
Of the total proceeds, Rs 12,750 crore will go into purchasing equipment necessary for expanding network infrastructure by setting up new 4G sites, increasing the capacity of existing 4G sites, and establishing new 5G sites.
Rs 5,720 crore of the Rs 12,750 crore is for network expansion on setting up its 5G network.
In FY25, the company plans to put up 10,000 new 5G sites in a budget of Rs 2,600 crore, and in the following FY, it aims to increase the sites by 12,000 with a spend of Rs 3,120 crore.
Vodafone Idea is also in talks with lenders to raise an additional Rs 25,000 crore through debt as a part of its fundraising process.
Further, the company’s management on Monday in a press conference said it would utilize the secured funding (raised through the mix of equity and debt) to roll out its 5G network service within six to seven months in select pockets and increase its 4G coverage.
Analysts are hopeful that the Rs 18,000 crore fundraiser will help Vodafone Idea bounce back in the competition and take on rival telecom operators to some extent. It will also be helpful to the cash-strapped entity to ease bank debt, paving the way for securing further funding from banks.
However, they forewarned that they do not see any meaningful gain by VI in the market share from its peers.