Business

Cash strapped mobile phone operator Vodafone-Idea to get Rs.14,500 crore foreign direct investment

Vodafone-Idea gets a fresh lease of life with FDI

March 5, 2022

Birla Group-controlled Vodafone-Idea to raise FDI of Rs.14,500 Cr

Soon after the Government of India’s bailout package, Aditya Birla Group-controlled mobile phone operator Vodafone-Idea is going to get around Rs.14,500 crores from foreign investors. As per the extra-ordinary general meeting notice (convening on March 26) sent to shareholders say around Rs.5,000 crore worth shares are allotted to three foreign investors for Rs.13.30 per share (Rs.3.30 premium) and Rs.10,000 crore is generated by the issuance of securities to foreign investors.

“….Board of Directors of the Company (hereinafter referred to as “Board” which term shall be deemed to include any duly constituted/ to be constituted Committee of Directors thereof to exercise its powers including powers conferred under this resolution), the consent of the members of the Company be and is hereby accorded to offer, issue and allot up to 3,38,34,58,645 (Three Hundred & Thirty-Eight Crore Thirty Four Lacs Fifty Eight Thousand Six Hundred & Forty-Five) equity shares of the face value of `10/- each of the Company (“Equity Shares”) for cash at a price of Rs.13.30 (including a premium of Rs.3.30) per equity share aggregating up to Rs.4,500 Crore, to the below mentioned proposed allottee(s) by way of the preferential issue on such other terms and conditions as set out herein, subject to applicable laws and regulations, including the provisions of Chapter V of the ICDR Regulations and the Act:

As per the EGM Notice, three foreign investors are: “1. Euro Pacific Securities Ltd. Promoter Upto 2,53,75,93,984 Equity Shares of `10/- each, 2. Prime Metals Ltd. 3. Oriana Investments Pte. Ltd. Promoter Group Upto 84,58,64,661 Equity Shares of `10/- each.” As per media reports of 2019, Vodafone already pledged shares to Euro Pacific Securities[1]. Prime Metals Ltd is a British company engaged in the metals and defence sector and Oriana is a Singapore-based financial investment company linked to the Aditya Birla group.

Regarding the issuance of securities up to Rs.10,000 crore the EGM notice said: “Issuance of securities up to an aggregate amount of 10,000 Crore …. Securities (as defined hereinafter), for cash at such price that may be decided by the Board in terms of the applicable regulations and as permitted under the applicable law, in one or more tranches, with or without greenshoe option for an aggregate amount of up to 10,000 Crore (Rupees Ten Thousand Crore only) to such investors, whether Indian or foreign, that may be permitted to invest in such issuance of Securities, including eligible qualified institutional buyers.”

Aditya Birla Group managed Vodafone-Idea had around Rs. Two lakh crore (around 26 billion dollars) dues to Government. Recently these dues were converted as shares and now the Government of India has 35.8% shares in the mobile phone company. The government has already said that they are not exercising any authority in the Vodafone-Idea as the largest shareholder.[2]

Reference:

[1] Vodafone pledges entire stake in Voda-Idea with foreign banks – May 09, 2019, Live Mint

[2] In a grand bailout, Tata Teleservices & Birla controlled Vodafone-Idea telecom companies offer shares to GOI to clean up their humongous dues – Jan 11, 2022, PGurus.com

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