Thursday, April 18, marked a crucial day for Vodafone Idea Ltd as they opened their massive 18,000 crore follow on public offer (FPO) to potential investors. The telecom giant, which has been grappling with a challenging phase, witnessed a somewhat tepid initial response, with the FPO securing just 26 percent subscription on its inaugural day.
Investors seemed to exercise caution, as evidenced by the varied interest levels across different investor categories. Qualified Institutional Buyers (QIBs) showed a relatively stronger conviction with 61 percent of their quota subscribed. In stark contrast, retail investors seemed far more hesitant, dipping their toes with a meager 6 percent subscription. Non-institutional investors (NII) were somewhat in between, recording a 28 percent subscription rate on day one.
In this expansive offer, Vodafone Idea made available a staggering total of 1,260 crore shares, setting a price band between Rs 10 and Rs 11 each. These figures do not take into account shares allocated to anchor investors prior to the public offering. The terms stipulate a minimum bid size of 1,298 shares, with subsequent bids to be in multiples of that number, providing a structured pathway for investors of various scales to participate.
This FPO marks a critical juncture for the telecom company, as it vies to bolster its financial standing by raising the significant sum of Rs 18,000 crore. Timelines are tight for potential investors, with the subscription window slated to shut promptly on Monday, April 22. During this time, the company’s stock is anticipated to be keenly observed by the market, as the subscription rate edges closer to the vital 90 percent threshold required for the FPO to succeed.
In preparation for this significant move, Vodafone Idea strategically fortified its position by securing a bolstering Rs 5,400 crore from a consortium of several institutional investors through an anchor book, just a day before the public offer opening. This savvy financial maneuver garnered the support of a noteworthy 74 institutional investors, including prestigious names such as Morgan Stanley, Fidelity, FIAM Group, UBS Fund Management, and HDFC Mutual Fund. This level of pre-emptive backing signals a substantial endorsement from the institutional domain, highlighting the potential that these financiers see in the telecommunication firm’s future.
Media outlets have highlighted that Vodafone Idea’s anchor book ranks as the third-largest of its kind, surpassed only by the impressive anchor rounds of One 97 Communications and LIC, which raised Rs 8,235 crore and Rs 5,627 crore, respectively. It remains to be seen whether the subsequent days of the FPO window will catalyze a surge in investor interest, achieving the necessary subscription percentage to render the public offering a success.
The stakes are high for Vodafone Idea, as the FPO’s accomplishment is not only a financial imperative but also a sign of investor confidence in its turnaround plan amidst the fiercely competitive telecom landscape. The company’s leadership, along with market analysts, will be monitoring the subscription progression with bated breath over the coming days, hopeful for a positive closing reflection of industry and investor optimism.
Investors are now on the clock as the countdown to the Monday deadline continues. Will the weekend bring a deluge of subscriptions, or will it remain a slow trickle? The answer to this question holds key implications for the future trajectory of Vodafone Idea Ltd and its place in the Indian telecommunications sector.
