Explained: Why Vodafone shares surged over 13% today
Vodafone Idea shares jumped over 13% during the trading session after its follow-on public offering received a strong response.
In Short
- Vodafone Idea shares surge over 13% after strong FPO reception
- FPO subscribed over 6 times on final bidding day
- FPO involves sale of 1,260 crore shares, largest offering in India
Shares of telecom firm Vodafone Idea surged over 13% on Tuesday after its follow-on public offering (FPO) garnered strong reception from investors.
At around 12.45 pm, shares of the telecom company were up 12.72% to Rs 14.53 apiece.
The telecom company’s FPO was subscribed more than 6 times on the final day of bidding, as investors showed keen interest, bidding for 8,011.8 crore equity shares, according to data from exchanges.
In an exchange filing on Monday, Vodafone Idea said, "We wish to inform you that the Board, at its meeting held today i.e. 22 April 2024, has approved and adopted the prospectus dated 22 April 2024 (the “Prospectus”), in connection with the Offer."
Vodafone Idea FPO details
Vodafone Idea’s Follow-on Public Offer (FPO) involved 1,260 crore shares for sale, totaling Rs 18,000 crore, marking India's largest such offering till date. This is part of the company's strategy to raise Rs 45,000 crore through a combination of debt and equity.
Qualified institutional buyers (QIBs) spearheaded the subscription frenzy, oversubscribing their allotted portion by 17.6 times. Non-institutional investors also displayed significant interest, subscribing 4.1 times their allotted share. Retail investors seized 90% of the shares earmarked for them.
Institutional investors injected Rs 5,400 crore through the anchor book at the upper price band of Rs 11 per share, with the offer's price band set at Rs 10-11 per share.
Notable anchor investors included Citigroup, Goldman Sachs, Morgan Stanley, GQG Partners, Fidelity, UBS Fund Management, Redwheel Funds, HDFC Mutual Fund, Government Pension Fund Global, Carnelian Capital, Copthall Mauritius Investment, and Societe Generale.
Vodafone Idea plans to utilise Rs 12,750 crore of the net proceeds from the FPO to enhance its network infrastructure, including deployment of new 4G and 5G sites and expanding the capacity of existing 4G sites.
Despite the FPO excitement, Vodafone Idea shares closed unchanged at Rs 12.90 on April 22 in the stock market. However, they have witnessed a 17% decline over the past three months.
As of April 22, 2024, the Grey Market Premium (GMP) for Vodafone Idea's FPO stands at Rs 1. With a price band of Rs 11.00, the estimated listing price for VI FPO is Rs 12 (upper price limit + today's GMP), indicating an expected percentage gain/loss per share of 9.09%.