In a triumphant response from investors, Vodafone Idea’s (VIL) mammoth Rs 18,000 crore follow-on-public offer (FPO) became the largest in India to experience overwhelming demand despite the tremulous market landscape. The FPO, which sought public capital from April 18 through April 22, achieved a subscription rate that far exceeded expectations, closing at an impressive 6.36 times over its initial offer on the ultimate day of bidding.
As per the exchange data on April 22, prospective shareholders submitted bids amounting to a staggering 8,012.29 crore equity shares in contrast to the FPO’s provision of 1,260 crore shares from the telecommunications giant. Underpinning this robust demand was the qualified institutional buyers (QIBs) segment, receiving bids for an extraordinary 6,321 crore equity shares, triumphantly surpassing their 360 crore share offering by 17.56 times. This segment was composed of both foreign institutional investors (FIIs) and domestic financial institutions like banks, financial institutions (FIs), and insurance companies. The non-institutional investors (NIIs) were not far behind, as they successfully secured 4.13 times the shares allotted to them.
Although institutional interest dominated, the retail investor’s portion saw a relatively more subdued uptake, with a subscription rate of 0.92, where retail investors claimed 576 crore shares out of an available 630 crore shares.
The final pricing for the FPO was locked in at a band ranging from Rs 10 to Rs 11 per share. At the end of trading on Monday, Vodafone’s shares clocked in at Rs 12.89 each, noting a marginal decrease of 0.23 percent.
Prior to the public offering period, Vodafone Idea managed to raise Rs 5,400 crore as part of their anchor book from institutional investors. This initial round resulted in the allocation of 490.9 crore shares to 74 different funds at the price of Rs 11 per share, which stood at the higher end of the declared price range.
Anchor investors were varied, with allocations handing 79.52 crore stocks, or 16.2 percent of the total anchor book, to five domestic mutual funds across a total of 11 schemes. The roster of the recognized investors included names such as GQG Partners Emerging Markets Equity Fund, Fidelity, UBS Fund Management, the Abu Dhabi Investment Authority, Australian Super, Troo Capital, Morgan Stanley, Citigroup Global Markets Mauritius, and Jupiter Fund Management.
Domestic investors, among whom were the likes of Motilal Oswal Mutual Fund, HDFC Mutual Fund, SBI General Insurance, and Quant Mutual Fund, saw their share of allocations in the anchor round as well.
The proceedings from this FPO will not merely boost the liquidity position of the company but are marked for a substantial investment into Vodafone Idea’s future. A budget of Rs 5,720 crore out of the earmarked Rs 12,750 crore is allocated specifically for the network expansion project. This includes the establishment of their 5G network infrastructure. Having planned an ambitious scenario for rapid deployment, Vodafone Idea intends to launch 10,000 new 5G sites by fiscal year 2025 with an investment of Rs 2,600 crore and aims to establish an additional 12,000 sites by FY26 with a planned fund infusion of Rs 3,120 crore.
This strategic move signals Vodafone’s resolute push towards capturing the burgeoning 5G market and strengthening its competitive position. The telecom operator’s significant capital raise through this FPO and the overarching response from the investor community are indicative of the trust and confidence in the company’s potential for growth and value creation, even against the backdrop of a tentative market environment.
