(Vi) is in advanced talks to sell a minority stake to global private equity investors including Apollo Global Management and Carlyle to raise up to $1 billion, or approx. Rs 7,540 crore, over the next two-to-three months, two people aware of the matter told ET.
Vi may follow that up with a follow-on public offer (FPO) to raise another $1 billion around June 2022 as institutional fundraising is likely to boost the confidence of retail investors betting on the telco’s revival, they said.
The struggling telco is looking to leverage the recent government relief package that has eased its immediate cash flow burden and made it more attractive to investors.
“Vi is open to offering a minority stake to global PEs if there is agreement on valuations and terms,” one of the people said.
Unlike earlier rounds of fundraising talks that were focused on capital infusion through convertible debt instruments, this time the joint venture between the UK’s Vodafone Group Plc and Aditya Birla Group (ABG) is looking to raise capital purely through the equity route.
The debt route, in fact, has been scrapped for now, the sources said.
Vi and ABG did not respond to ET’s queries as of press time Wednesday. Vodafone declined to comment. Queries to Apollo Global and Carlyle also went unanswered.
PROMOTER INFUSION
A senior industry executive privy to the developments said Vodafone and ABG are also considering ways to show confidence in the telco’s future by making some capital infusion.
ET had in its Tuesday’s edition reported that ABG chairman Kumar Mangalam Birla is considering infusing some of his own capital into Vi while Vodafone may explore monetising a small part of its 28.12% stake in Indus Towers and channel it into Vi.
Another person said Vodafone UK may try to raise up to $500 million through such partial monetisation of its Indus stake.
At present, Vodafone and ABG own 44.39% and 27.66%, respectively, in Vi.
Vi has also been looking to mop up an additional $1 billion from sale of its fixed-line broadband subsidiary YOU Broadband along with its optic fibre and data centre assets.
But the company’s management had said last month that the asset sale is not a priority anymore after the government’s relief package announced middle of September. This may come up next year, if required.
Vodafone Idea shares remained almost flat, rising 0.28% to close at Rs 10.70 on the BSE on Wednesday, giving it a full market cap of almost Rs 31,746 crore.
A potential $1 billion equity infusion from external PE investors would translate to around a 24% stake at Vi’s current market cap.
LENDERS’ PUSH
Lately, Vi’s lenders have been pushing the telco to raise funds to start clearing its upcoming financial dues starting December. Kotak Securities estimates Vi’s total borrowings at Rs 23,400 crore and its annual payout towards interest on bank loans at Rs 2,600 crore. The telco is also staring at a Rs 6,000 crore payout towards redemption of non-convertible debentures (NCDs), also starting December.
“Vi is likely to reach out to bondholders to offer either equity swap options or extend maturities for upcoming repayments starting from December,” said an investment banker aware of matters.
For about a year, the cash-strapped telco has been in talks with a slew of potential investors. But it hasn’t been able to close its planned Rs 25,000 crore fundraise and had blamed unviability of the sector as the main reason. Vi needs the money quickly as it needs to ramp up its 4G networks in its 16 priority markets to compete with financially stronger rivals Bharti Airtel and Reliance Jio more effectively.
The four-year moratorium on adjusted gross revenue (AGR) dues and spectrum payments allowed by the government allows Vi to defer a cumulative payment of nearly Rs 1 lakh-crore – around Rs 25,000 crore annually – over the next four years and, in turn, improve its cash flows.
Vi managing director Ravinder Takkar recently said that following the change in the ground situation after the relief package, he was confident that the telco’s promoters would continue to support the company as in the past.
