Foreign investors likely to pump in Rs 18,000 cr in Vodafone Idea rights issue

Foreign investors are likely to invest around Rs 18,000 crore in the rights issue of Vodafone Idea, which includes a major chunk from promoter Vodafone Group, sources said.

The company’s Rs 25,000 crore rights issue will open onApril 10.

   

“Vodafone Idea had approached government for FDIapproval. The proposal has received clearance from Cabinet. It is expected thatRs 18,000 crore during the rights issue will come from foreign sources,”an official said.

Any foreign funding above Rs 5,000 crore requires Cabinetapproval. The Cabinet had on February 28 cleared the company’s FDI proposal.

The promoter shareholders — Vodafone Group and Aditya BirlaGroup — have reiterated to the board that they intend to contribute up to Rs11,000 crore and up to Rs 7,250 crore respectively, amounting to total of Rs18,250 crore, as part of the rights issue.

While Vodafone Group’s entire funding will be considered asforeign investment in the rights issue, Aditya Birla Group may also route fundsfrom its foreign entities, sources said.

The board of directors of Vodafone Idea on March 20 clearedthe planned Rs 25,000-crore rights issue at a price of Rs 12.50 per equityshare, a steep 61 per cent discount to the prevailing market rate.

In a regulatory filing, the company had said the rightsentitlement ratio has been fixed at 87 equity shares for every 38 shares heldby eligible shareholders of the company on the record date, that is April 2,2019.

According to Citi Research, the successful completion of the capital raise would be positive for the company as it could strengthen the balance sheet, remove going concern risks, and help enhance network capacity and coverage.

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