Vodafone Idea plans to raise Rs 7,000 crore via QIP; stock rises 10%

Vodafone Idea is looking for new investors after both its promoters have refused to infuse additional funds into the company

Vodafone Idea Ltd (VIL), a joint venture between the Aditya Birla group and Vodafone Plc of the UK, is planning a qualified institutional placement (QIP) of shares to raise up to Rs 7,000 crore to meet its funding requirements, sources aware of the matter said. The firm is also exploring other fundraising options, including convertible debentures.

VIL is looking for new investors as both promoters have refused to infuse additional funds into the company. Earlier, the firm planned to raise debt overseas but is still waiting for an opportune time to launch the issue, said a banking source.

The company’s shares closed 10 per cent up at Rs 10.36 on Friday on fund raising plans. When contacted, VIL did not comment on the matter.

Following this, both promoters will significantly dilute their stake in the company.

VIL is also planning to raise up to $750 million (about Rs 5,500 crore) via convertible bonds to repay its adjusted gross revenue (AGR) dues and spectrum fees to the government. It has also urged the Indian government to relax the foreign direct investment (FDI) ceiling.

The company fell into a financial crisis after the Supreme Court, in September last year, directed telecom companies to pay 10 per cent of their total AGR dues by March 31, 2021, and the balance amount in annual instalments commencing April 1, 2021, up to March 31, 2031, payable by March 31 of every succeeding financial year. The AGR dues of VIL aggregated to a massive Rs 58,250 crore up to FY2016-17 on the basis of preliminary assessment by the Department of Telecom (DoT).

The company’s board had earlier approved fund raising through the issue of equity shares or securities convertible into equity shares, and other instruments to raise up to Rs 15,000 crore. At the same time, it was planned to raise another tranche of Rs 15,000 crore by way a public issue, preferential allotment, private placement, qualified institutional placement or through any other permissible mode in one or more tranches and issuance of unsecured and / or secured, non-convertible debentures etc. However, the total fundraising, Vodafone Idea said, will not exceed Rs 25,000 crore.

Since then, the company looked at various instruments and applied to the Indian government to increase the FDI limit – in case it attracts foreign investors.