Gujarat-based Vodafone Idea raises Rs 5,400 crore from anchor investors ahead of FPO

Gujarat-based telecom company has raised Rs 5,400 crore from 74 anchor investors, allocating 491 crore shares to anchor investors at Rs 11 per share.  

Major global and domestic investors, including GQG Partners, Fidelity Investments, UBS Fund Management, and The Master Trust Bank of Japan, have participated.

Distribution of investments among anchor investors

GQG Partners, based in the US, emerged as the top investor with an investment of Rs 1,345 crore, signifying 26% of the total shares allocated to anchor investors. Other investments came from Fidelity Investments with Rs 772 crore, and Troo Capital and Australian Super with Rs 331 crore and Rs 130 crore, respectively. 

Additionally, five domestic mutual funds led by Motilal Oswal Midcap Fund invested Rs 874 crore, representing 16.2% of the total allocation.

Focused on network expansion

The company will use the raised funds for comprehensive network expansion, including the establishment of new 4G and 5G sites. It plans to raise Rs 18,000 crore through India’s largest follow-on public offering, which will open on Thursday, April 18. The public offer, at a price band of Rs 10-11, will conclude on April 22.

Out of the Rs 18,000 crore, Rs 12,750 crore will be utilized to enhance network infrastructure. 

Specifically, Rs 5,720 crore is allocated for developing 22,000 5G sites over the next two fiscal years, with the company planning to launch 5G services in selected regions within 6-9 months post-issue. The remaining funds will be used for the expansion of existing 4G capabilities, deferring spectrum payments, and other corporate purposes.

Strategic importance of the FPO

This FPO is noteworthy not only because it's India's largest to date but also because it represents a crucial step for Vodafone Idea in maintaining competitive parity with rivals like Airtel and Reliance Jio, both of which already offer 5G services. The government, which is the single-largest shareholder with a 32% stake prior to the FPO, will see its share dilute to about 24%, while promoter shareholding will decrease to about 38%.