Foreign investors are likely to make an investment of around Rs 18,000 crore in the rights issue of Vodafone Idea, which includes a major chunk from main promoter Vodafone Group of the UK, PTI reported.
Vodafone Idea, which completed the merger last year, will start the Rs 25,000 crore rights issue on April 10.
India’s Cabinet on February 28 cleared Vodafone Idea’s proposal for FDI approval. Any foreign funding above Rs 5,000 crore requires Cabinet approval. “It is expected that Rs 18,000 crore during the rights issue will come from foreign sources,” an official said.
The largest promoter shareholder — Vodafone Group intends to contribute up to Rs 11,000 crore. The second largest shareholder Aditya Birla Group aims to contribute up to Rs 7,250 crore. The total contribution from promoter shareholders will be Rs 18,250 crore as part of the rights issue.
Vodafone Group’s entire funding in Vodafone Idea will be considered as foreign investment in the rights issue. Aditya Birla Group may also route funds from its foreign entities, sources said.
The board of directors of Vodafone Idea on March 20 cleared the planned Rs 25,000-crore rights issue at a price of Rs 12.50 per equity share, at 61 percent discount to the prevailing market rate.
Vodafone Idea earlier said the rights entitlement ratio has been fixed at 87 equity shares for every 38 shares held by eligible shareholders of the company on the record date of April 2, 2019.
The completion of the capital raise will be positive for Vodafone Idea as it could strengthen the balance sheet, remove going concern risks, and help enhance network capacity and coverage, according to Citi Research.Need a Business Phone Number? Use DID phone numbers with your business phone system by Hottelecom!