New Delhi: 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, April 10.
“Vodafone Idea had approached government for Foreign Direct Investment (FDI) approval. The proposal has received clearance from Cabinet. It is expected that Rs 18,000 crore during the rights issue will come from foreign sources,” an official of the company said Sunday.
Any foreign funding above Rs 5,000 crore requires Cabinet approval. The Cabinet had February 28 cleared the company’s FDI proposal.
The promoter shareholders – Vodafone Group and Aditya Birla Group – have reiterated to the board that they intend to contribute up to Rs 11,000 crore and up to Rs 7,250 crore respectively, amounting to total of Rs 18,250 crore, as part of the rights issue.
While Vodafone Group’s entire funding will be considered as foreign investment in the rights issue, the Aditya Birla Group may also route funds from its foreign entities, sources said.
The board of directors of Vodafone Idea cleared March 20, the planned Rs 25,000-crore rights issue at a price of Rs 12.50 per equity share, a steep 61 per cent discount to the prevailing market rate.
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.
PTI