Idea to raise Rs 3,250 crore from promoters ahead of merger with Vodafone
NEW DELHI: Heading toward a merger with Vodafone India Ltd, telecom major Idea Cellular has decided to raise Rs 3,250 crore from its promoter Aditya Birla Group. While analysts say the fund raise is primarily focused toward bringing its debt ratio down to levels agreed to during the merger discussions, the capital will also help the merged entity ramp up its product offerings.
The Idea board has also agreed to set up a panel to consider options to raise an additional Rs 3,500 crore via a preferential issue, a qualified institutional placement or a rights issue within the next month. The current round will be raised by issuing 32.66 crore preferential shares at Rs 99.50 apiece to all or any of Birla TMT Holdings Pvt Ltd, Elaine Investments Singapore, Oriana Investments Singapore, and Surya Kiran Investments Singapore.
The preferential issue will see the promoter holding in Idea Cellular increase to 47 per cent from 42.4 per cent currently. According to Idea, these rounds of fundraising, along with the sale of its stand-alone towers assets to ATC and the potential monetisation of its 11.15 per cent stake Indus Towers Ltd, will augment its long-term capital resources. Vodafone, in its statement, added that these funds will be used to strengthen the balance sheet of the merged entity.
“The fundraising plan will definitely aid Idea cellular in terms of deal apprising in their balance sheet. The move was also be necessitated by the fact that Idea needed to ramp up its product offerings and at the same time strengthen its infrastructure requirements,” said Mayuresh Joshi, fund manager, Angel Broking. “This clearly is an indication that the management is very hopeful that only a small group of players will
remain,” he added.