Vodafone Idea gets a new 'lifeline', big investors including Tata invested Rs 3,300 crore!
There's significant relief for debt-ridden Vodafone Idea. Tata Capital and other investors have invested heavily in the company's ₹3,300 crore bond issue, with Tata's share being ₹500 crore. Amidst the indifference of banks, this confidence from NBFCs will help the company improve its network and expand its business, raising hopes for improved service for its customers.
Vodafone Idea news: Vodafone Idea (Vi) has been grappling with a severe financial crisis and debt burden for quite some time, but now the market has brought some significant relief to the company.
Major investors in the country have expressed confidence in the company's credibility and have opened their coffers. It is reported that a prestigious financial institution like Tata Capital has invested a substantial amount of approximately ₹500 crore in Vodafone Idea's latest bond sale. In total, the company has raised ₹3,300 crore from the market.
These giants also bet with Tata
Tata Capital isn't alone in this fundraising; several other major financial players have also extended a helping hand to Vi. According to reports, JM Financial Credit Solutions, Aditya Birla Capital, and Hero FinCorp have also committed investments of approximately ₹400 crore each.
Furthermore, Nomura Capital also participated in this funding round through its offshore and NBFC routes. This move demonstrates that even as mainstream banks are hesitant to lend, non-banking financial companies (NBFCs) remain confident in Vodafone Idea's future and its returns.
This entire process was completed through Vodafone Idea Telecom Infrastructure, a wholly-owned subsidiary of Vodafone Idea. The bonds were issued in two tranches.
Series A raised ₹3,000 crore, offering investors an attractive interest rate of 12%. Series B raised ₹300 crore at a 7% interest rate. These securities have a maturity of approximately 21 months and a call option after one year.
The company will primarily use this proceeds to pay for the transfer of fiber assets and to fund its network enhancements (Capex Plans).
Are good days ahead for Vodafone Idea?
While banks are shying away due to their exposure limits and asset quality concerns, mutual funds and NBFCs are willing to take risks for higher returns. This funding is a lifeline for Vodafone Idea. It's worth noting that in April, the government acquired a 48.99% stake in the company by converting spectrum dues into equity.
Furthermore, the Supreme Court recently indicated it would consider a petition seeking relief on AGR dues. If this new funding is used effectively to improve the network, it could provide significant relief to ordinary users facing call drops and internet speed issues in the future.
Disclaimer: This article is for informational purposes only and should not be construed as investment advice.
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