NEW DELHI: Vodafone Group PLC on Wednesday sold 484.7 million (48.47 crore) shares in Indus Towers Limited, representing 18% of the latter’s share capital through an accelerated book-building offer. The placing raised Rs 15,300 crore (€1.7 billion) in gross proceeds which will be used by Vodafone to substantially repay its existing lenders in relation to the outstanding bank borrowings of €1.8 billion secured against Vodafone’s Indian assets.
Following the placing, Vodafone now holds 82.5 million (8.25 crore) shares in Indus, equivalent to a 3.1% shareholding. Bharti Airtel on Wednesday said that it has acquired a 1% equity stake in Indus Towers. Besides Airtel, SBI Mutual Fund and Kotak Securities were also among the buyers of Indus Tower shares.
JP Morgan in a research note said that as per a security package agreed upon during the merger of erstwhile Bharti Infratel and Indus Towers, Vodafone Plc’s 21.05% stake in Indus was the primary pledge by its lenders against the initial $1.4 billion loan Vodafone had taken in back 2019 to participate in its Indian telecom JV, Vodafone Idea’s rights issue.
JP Morgan said that if this share sale goes through, then the proceeds would be first used to repay Vodafone UK’s lenders. Indus Towers has a secondary pledge on this Vodafone UK stake with a maximum liability of Rs 4,250 crore.
“Vodafone PLC will first clear the dues of the primary pledgers and the residual amount should go towards Indus Towers’ dues with a max limit of Rs 42.5 billion (Rs 4,250 crore) directly or indirectly,” it said in the note. The stake sale by Vodafone in the Indian tower company is more than what it was expected to offload. The telecom giant on Tuesday was rumoured to sell about 10% stake in Indus for as much as $1.1 billion as a part of its efforts to repay debt.
The stake sale comes months after billionaire Sunil Mittal-led Bharti Airtel denied news reports that it was in talks to buy Vodafone Group’s stake in Indus Towers. Bharti Airtel is Indus Towers’ biggest shareholder, with a 47.95% stake. With an additional 1%, Airtel’s holding has now increased to about 49%.
The block deal in Indus Tower triggered a massive spike in volumes and pulled down the shares by 10% to a low of Rs 311.40 on the NSE. More than 83 crore shares changed hands on Wednesday. Indus shares finally settled at Rs 334 a piece, down 3%.