The follow-on public offering (FPO) of Vodafone Idea was fully-subscribed on the third and final day of the bidding, thanks to buying interest of institutional and HNI investors. The issue was subscribed 29 per cent on the day one, while it ended the second day of the bidding with 54 per cent subscription. The Telecom operator Vodafone Idea is selling its shares in the price band of Rs 10-11 apiece. Investors can apply for a minimum of 1,298 shares and its multiples thereafter. The Rs 18,000 crore FPO issue includes a fresh share sale of 16,363,636,363 equity shares, making it the largest follow-on offer of the Indian markets. According to the data, the investors made bids for 50,07,11,08,032 equity shares, or 3.97 times, compared to the 12,60,00,00,001 equity shares offered for the subscription by 3.00 PM on Monday, April 22. The three-day bidding, which has kicked-off on Thursday, April 18, concludes today. The portion set aside for qualified-institutional bidders (QIBs) attracted bids for 10.42 times, while quota reserved for non-institutional investors saw a subscription of 3.17 times. However, the allocation for retail investors was subscribed only 63 per cent as of the same time.
Vodafone Idea, Incorporated in March 1995, is a telecommunications player, which provides voice, data, and value-added services across 2G, 3G, and 4G technologies, such as short messaging and digital services for enterprises and consumers. Vodafone Idea's shares have lost steam as the grey market premium for the counter is merely Rs 0.50 for now, suggesting a listing pop of 4-5 per cent for the investors. The premium in the unofficial market stood at Rs 0.60 over the weekend, but was around Rs 1.50 on the first day of the bidding. Brokerage firms are mostly positive on the back anticipated tariff hikes, growth in average revenue per user (ARPU), capacity expansion and growth reduction plans. Analysts, tracking the issue, believe that the fundraising will help the company in its financial crunch. However, they anticipate user base growth and execution of revival plans will be key things to watch out for. Vodafone Idea FO is a step in the right direction as it would help the company to improve its competitiveness in the near duopoly Indian telecom market. The company’s focus to improve its 4G penetration and launch 5G services in the next few quarters would enhance the ARPU which is lower than peers, said Manish Chowdhury, Head of Research at StoxBox. "We believe that Vodafone Idea would be in a better position to raise funds in future, both through equity and debt, to service its obligations and growth plan. The recent capital infusion by promoters and government’s efforts to keep the company as a going concern instils confidence about the turnaround prospects of the company," he said, suggesting investors with moderate to high-risk appetite subscribe for a medium to long term perspective. Vodafone Idea has reserved 50 per cent of the net offer for the qualified institutional investors (QIBs), while non-institutional investors (NIIs) will get 15 per cent of shares. Retail investors will get 35 per cent of the net offer. The telecom operator has raised Rs 5,400 crore from several institutional investors via an anchor book. Considering the near-term risks of continued losses, subscriber attrition due to lack of expansion of 4G services compared to its peers, VIL is a high risk proposition in the short to medium-term, said Geojit Financial Services. "The long-term outlook will depend on the restructure of the debt and expansion in 4G & 5G offerings. Given the strong parentage support, we assign the subscribe rating for high risky investors on a long-term basis," it said. Axis Capital, Jefferies India and SBI Capital Markets are the book running lead managers of the Vodafone FPO, while Link Intime India is the registrar for the issue. The FPO shares will be listed at the bourses, both BSE and NSE, on Thursday, April 25, 2024.