Vodafone Idea's FPO Oversubscribed 6.36 Times, Investors Bid for 8,011.8 Crore Equity Shares

On April 22, the last day of bidding, subscription data from exchanges revealed that investors bid for a staggering 8,011.8 crore equity shares, resulting in Vodafone Idea's follow-on public offer (FPO) being subscribed 6.36 times.

The telecom operator, ranking third in the country, aimed to raise Rs 18,000 crore through the FPO, the largest such offering in India, by offering 1,260 crore shares. This fundraising is part of a wider strategy to gather Rs 45,000 crore through a mix of debt and equity.

Qualified institutional buyers (QIBs) led the subscriptions, oversubscribing by 17.56 times their portion. Non-institutional investors and retail investors also showed interest, with 4.13 times and 91 percent subscription rates, respectively.

The high net worth individual (HNI) portion was subscribed 4.13 times, while the retail portion fell short, reaching only 91 percent subscriptions. Nonetheless, the FPO attracted over 1.1 million applications. Atul Mehra, MD & CEO of Axis Capital, one of the issue's bankers, expressed satisfaction at the closure of India's largest FPO, highlighting the nearly 19x oversubscription of the QIB portion.

Shares of Vodafone Idea experienced volatility in secondary market trading, closing at Rs 12.9, down 0.23 percent from the previous day. The FPO's price band was set at Rs 10-11, but considering the high demand, the new shares are expected to be priced closer to the upper end.

Despite concerns about the dilution of the equity base due to the important fundraising, the strong demand, particularly from foreign funds, is seen as a positive indicator for the company. Analysts noted that large investors were willing to take risks, anticipating potential gains if Vodafone Idea thrives.

The fundraise, approved by Vodafone Idea's board in February, aims to provide financial relief and enable additional assets in the network. With substantial debt and consistent losses over the past years, Vodafone Idea faces challenges in competing with its peers in network expansion and technology investments, leading to a decline in subscribers and revenues, benefiting competitors like Reliance Jio and Bharti Airtel.