NEW DELHI: Showing confidence in its India joint venture, UK-based Vodafone Group on Monday raised its stake in cash-strapped Vodafone Idea Limited’s (VIL) from 44.39% to 47.61% through its subsidiary Prime Metals Limited (PML). Experts say the move is a signal of promoter’s intent to rebuild the company. They say the renewed confidence by the parent company would have a rub-off effect on other investors.
“This signals the promoter’s intent to rebuild the company and such moves would also bring in confidence to other investors to participate in the rest of the fund raising plan. This fund raised would help VIL address its short-term cash flow requirements,” said Prashanth Tapse, vice- president (Research) at Mehta Equities Ltd. Vodafone Group has acquired 570,958,646 equity shares through allotment of equity shares pursuant to a preferential issue by the Company. Prime Metals Ltd held 2,18,55,26,081 equity shares (representing 7.61% of the equity share capital) of Vodafone Idea Limited.
Vodafone Idea in March announced that its board had approved a proposal to raise Rs 14,500 crore from its promoters and investors through equity, warrants and convertible debentures. Last week, the telecom operator’s board member approved allotment of 338.3 crore equity shares to its three promoters to raise Rs 4500 crore. It had issued shares at a price of Rs 13.30 per equity share, including a premium of Rs 3.30 per equity Euro Pacific Securities, Prime Metals and Oriana Investments.
“Vodafone Group raising stake in Vodafone Idea is certainly positive news for the operator’s ambitions of raising funds externally. It will provide investors and lenders the confidence to consider infusing investment as it improves the operator’s viability,” said Charu Paliwal, Research Analyst at Counter Research. The infusion of funds will help Vodafone Idea invest in the upcoming 5G spectrum auction.