Vodafone Idea FPO subscribed 26% on Day 1

Mumbai: Vodafone Idea's ₹18,000 crore follow-on public offer (FPO), India's biggest, began on a positive note on Thursday. The issue was subscribed 26% on the first day of bidding, largely driven by strong demand from qualified institutional buyers (QIBs). However, the non-institutional investors (NIIs) portion saw modest demand, while the retail segment saw relatively weaker interest.

The QIB portion was subscribed 61% on the opening day, marking a promising start. Typically, QIBs tend to bid on the final day of the offer. The majority of bids in the QIB portion came from foreign institutional investors (FIIs).

The NII portion, for high net worth individual investors, was subscribed at 28%, while the retail segment saw just 0.06% subscription.

The FPO, priced in a range of ₹10-11 per share, is scheduled to close on Monday, April 22.

On Tuesday, the loss-making telco raised ₹5,400 crore from 74 anchor investors by allotting 4.91 billion shares at ₹11 per apiece.

Stock Rallies 2.17%
Shares of Vodafone rallied 2.17% on Thursday to close at Rs 13.20 on the BSE. The share price has more than doubled in the past year.

Rajiv Jain's GQG Partners, through several of its funds, has invested nearly Rs 1,350 crore in Vi's anchor book.

Foreign institutional investors such as UBS, AustralianSuper, Fidelity, Redwheel Funds, Abu Dhabi Investment Authority, Allspring Global Investments, Morgan Stanley Investment Funds, Government Pension Fund Global, Copthall Mauritius Investment, and Societe Generale were among those that subscribed to the telco's anchor book. Domestic mutual funds like HDFC, Quant, Motilal Oswal, Baroda BNP Paribas, and 360 One were also among the anchor investors.

Most analysts recommended subscribing to the FPO, saying that the operator's prospects stand to improve with the fresh infusion of money after the share sale.

"FPO price offers reasonable upside," said Balaji Subramanian, analyst at IIFL Securities. "Equity infusion is likely to result in Rs 45,000 crore funding and should enable Vi to narrow the 4G coverage and capacity gap with peers. This would not only arrest subscriber losses but also enable faster upgrade of 2G users to 4G."

According to Hemang Jani, director of Finazenn, an investment advisor, the FPO is a good opportunity to get attractive pricing for the brand name and customer base that Vodafone has.

Vodafone Idea needs funds to repay vendors such as tower company Indus Towers, strengthen its 4G network and fund the launch of 5G services in a bid to stem subscriber losses. Rivals Reliance Jio and Bharti Airtel have already completed the pan-India rollout of 5G services.