Vodafone Idea's Rs 18,000 crore FPO opens; should retail investors apply?

Vodafone Idea FPO: The Rs 18,000 crore follow-on public offer (FPO) of Vodafone Idea (Vi) will open for subscription today (April 18, Thursday). If successful, it will be India's largest FPO. Before this, the largest FPO in the Indian market was a Rs 15,000 crore share sale by YES Bank.

Here are the 10 key things you need to know.

Anchor book: Vodafone Idea has raised nearly Rs 5,400 crore from marquee global and domestic investors. Some of the notable names who subscribed to the anchor book are GQG Partners, UBS, Morgan Stanley India Investment Fund, Citigroup Global Markets Mauritius, Goldman Sachs, and Fidelity, among others.

FPO subscription date: The follow-on public offer will open on April 18 and close on April 22.

FPO price band: The price band for the offer is Rs 10–11 per share. The higher end of the price band (Rs 11) is at a discount of about 26 per cent compared to the recently approved preferential issue price to the promoter entity at Rs 14.87. 

Minimum bid lots: The minimum bid lot will be 1,298 equity shares, and in the multiples of 1,298 equity shares, thereafter. The back-of-the-envelope calculations show that at the upper end of the price band, the minimum application amount would add up to Rs 14,278 for a single lot of shares.

Book-running lead managers: The book-running lead managers of the FPO are Axis Capital Limited, Jefferies India Private Limited, and SBI Capital Markets Limited.

Fund utilisation: The fundraising would give the ailing telco the firepower to improve its positioning in the Indian telecom market, where it currently trails larger rivals such as Reliance Jio and Bharti Airtel by a wide margin. It would also help VIL shore up finances for the much-delayed 5G rollout, strengthen 4G services, and pay vendor dues.

Expert Take: Analysts say that this capital infusion is the beginning of the long-term plan to restore the business to its old glory. VIL has been losing subscribers month after month and fighting a desperate battle for survival saddled with debt of Rs 2.1 lakh crore and quarterly losses. G Chokkalingam, founder and MD of Equinomics Research, says that retail investors can apply since there is a 10 per cent arbitrage opportunity as compared to the market price. 

5G rollout in 6–9 months: The company's chief executive officer, Akshaya Moondra, said recently that once the funding comes, it will start work on the rollout. The 5G rollout will cover 40 per cent of the company's overall revenue base in the next 24–30 months.

Fundraising History: On February 27, 2024, the company received a nod to raise Rs 20,000 crore via equity and Rs 25,000 crore via debt. On April 6, 2024, the promoter group received approval to issue preferential shares worth Rs 2,075 crore. In the March 2022 board meeting, the company raised Rs 4,500 crore from three investors. Then in June 2022, the company raised Rs 436 crore, and then in October 2021, the company raised Rs 1,600 crore.

Vodafone Idea share price: Shares of the company on Tuesday ended 1.82 per cent lower at Rs 12.92 apiece on the BSE. The markets were shut on Wednesday, April 17, on account of Rama Navami.