Vodafone Idea Sets Floor and Cap Prices for FPO Amid Market Speculation

In a major development, Vodafone Idea Ltd. has revealed the floor price and cap price, alongside the lot size, for its upcoming follow-on public offering (FPO). The telecom giant witnessed a decrease of more than 3.25% during early trading on Wednesday, settling at ₹12.51, thus holding a market capitalization exceeding ₹61,000 crore.

The capital raising committee of Vodafone Idea, in a meeting held on Friday, March 12, 2024, authorized and recommended a floor price of ₹10 per equity share and a cap price of ₹11 per equity share for the FPO, as stated in the company's exchange filing. Moreover, it was announced that the minimum bid lot would consist of 1,298 equity shares, with multiples of the same thereafter. At the floor price, each lot would cost ₹12,980, whereas at the cap price, it would be priced at ₹14,278.

Additionally, a meeting of the capital raising committee is set for March 16, 2024, to finalize the allocation of equity shares to the successful anchor investors and to decide the anchor investor allocation price.

Vodafone Idea had prior approval for the commencement of its FPO starting from Wednesday, March 14, and concluding on Sunday, March 18. The telecom behemoth plans to raise a total of ₹18,000 crores through its secondary stake sale, as per another exchange filing. Noteworthy, the company also okayed the red herring prospectus (RHP) for the offer.

The FPO, scheduled from March 14 to March 18, will be accessible for anchor investors on March 16, according to the notification to the BSE. It's important to note that the higher end of the price band of ₹11 is set at a discount of approximately 26% compared to the recently approved preferential issue price to the promoter entity Oriana Investments Pte. Ltd, at ₹14.87 per share.

Additionally, roadshows and interactive sessions with investors and analysts are being scheduled across various Indian cities from the week beginning March 15 until the bid closing date.

Vodafone Idea's shareholders approved a fundraising initiative worth ₹45,000 crores, including a ₹20,000 crore equity-based capital infusion from existing investors. The telco has also sanctioned allotting shares worth ₹2,075 crore to Oriana Investments on a preferential basis. The objective is to complete the fundraising process by the end of June.

To Summarize

Despite the announcement of the fundraise, Vodafone Idea's shares saw a decline of more than 4% during early trade on Friday. Struggling with a significant debt of ₹2.1 trillion, the telecom giant faces challenges, including erosion in subscriber base and revenue, among stiff competition in the telecom sector.