Idea Cellular Limited, the third-largest wireless operator in India by subscriber base, on Monday completed the allotment of 326.6 million equity shares to the promoter Aditya Birla Group to raise Rs 32.50 billion.
As a result of this preferential allotment, the aggregate shareholding of the promoter group in Idea Cellular has increased from 42.4 per cent to 47.2 per cent. "Today (Idea) completed the allotment of 326,633,165 equity shares to the Aditya Birla Group entities, at an issue price of Rs 99.50 per share (including premium of Rs 89.50 per share) aggregating to Rs 3,250 crore (Rs 3.25 billion)," said the company in a statement.
The preferential allotment of equity shares follows the approval by Idea's board of directors, on January 4, to raise capital of up to Rs 67.50 billion. This amount includes Rs 32.50 billion through a preferential allotment to the promoter group.
An additional Rs 35 billion was to be raised through further preferential allotment, qualified institutional placement, rights issue or such other route that Idea's board determines, the company said in a filing. "With the planned fund raise, combined with the recently announced sale of Idea's towers and potential monetisation of the Indus stake, the firm will be better capitalised to participate in the growth opportunities offered by the sector," said Kumar Mangalam Birla, chairman, Aditya Birla Group.
This equity infusion as well as the proposed Rs 35 billion capital will reduce Idea's net debt and as a result Vodafone's net debt contribution to the merged entity will also be reduced by an equivalent amount, Idea said. The recently announced sale of Idea's and Vodafone India's standalone towers to American Tower Corporation for an aggregate enterprise value of Rs 78.5 billion and the potential monetisation of Idea's 11.15 per cent stake in Indus Towers, will further augment the long-term capital resources of the company, the company said in the filing.
Idea's shares closed 1 per cent higher at Rs 84.70. Idea's net debt as of December 31 was Rs 557.8 billion. Business Standard had reported last month that banking sources believed Vodafone was concerned about Idea's huge losses and had requested the promoters to fund the losses before the closure of their impending merger in March.