Vodafone Sells Massive 18% Stake in Indus Towers with No Gain – Raises $2 Billion

Vodafone Group’s Stake Sale:

Vodafone Group Plc has sold nearly 18% of its shares in Indus Towers, raising about $2 billion. Initially, they planned to sell around 10%, but the sale increased.

Use of Funds:

The money from this sale will mostly go towards repaying Vodafone’s debts. This debt was linked to the merger of Vodafone India and Idea Cellular back in 2017. Any leftover funds might be used to cover Vodafone Idea’s adjusted gross revenue dues.

Debt Repayment:

Vodafone’s annual report for 2023 showed it had €1.5 billion in bank borrowings against its Indian assets, including Vodafone Idea. After selling 484.7 million shares, Vodafone’s holding in Indus Towers has dropped from 21.5% to 3.1%.

Impact on Vodafone Idea:

Vodafone Idea, a major customer of Indus Towers, did not benefit from this stake sale. Although it raised ₹18,000 crore in India’s largest follow-on public offer (FPO) in April, the funds couldn’t be used to pay its ₹10,000 crore debt to Indus Towers.

Who Bought the Shares:

• SBI Mutual Fund bought over 35 million shares worth ₹1,117 crore.
• Bharti Airtel bought 26.95 million shares for ₹860 crore, increasing its stake in Indus Towers to 48.95%.
• Other buyers included Ghisallo Capital Management LLC, Kotak Securities Limited, and Authum Investment and Infrastructure Limited.

Who Sold the Shares:

The sellers were Vodafone Group’s subsidiaries, including Euro Pacific Securities Ltd, CCII (Mauritius), and several others. On Tuesday, Vodafone announced it would sell a 9.94% stake in Indus Towers at ₹310-₹341 per share. However, the sale size increased to 18% on Wednesday, raising $1.8-$1.9 billion.

Additional Information:

Private equity firm I Squared Capital and alternative investment firm Stonepeak were potential buyers in the deal, which had a 90-day lock-in period. Morgan Stanley, Bank of America, BNP Paribas, and Jefferies managed the block deal.

In February, private equity firm KKR and Canadian fund CPPIB also sold their entire stakes in Indus Towers. KKR sold 130.8 million shares at ₹210.21 each, and CPPIB sold 2.14% at ₹212.15 each.

Recent Trading:

• Vodafone Idea’s shares closed 0.36% higher at ₹16.92.
• Indus Towers’ shares fell 2.88% to ₹334.
• Bharti Airtel’s shares dropped 2.49% to ₹1,393.15.

In 2022, Vodafone Group sold over 7% of Indus Towers, with 4.7% acquired by Bharti Airtel. The proceeds were used to reduce Vodafone Idea’s debt, which currently stands at over ₹2.1 trillion.