Vodafone Idea’s follow-on public offer (FPO) secured 26 per cent subscription on Day 1.

According to Bombay Stock Exchange data, the quota for qualified institutional buyers saw 61 per cent subscription, retail portion 6 per cent, and the non-institutional investor category 28 per cent subscribers.

Anchor investors

Investors such as Fidelity, UBS, and Jupiter Fund Management had acquired shares worth ₹5,400 crore as anchor investors ahead of the FPO. Voda Idea hopes to raise ₹18,000 crore from this issue.

The FPO will run from April 18 to 22. Total shares on offer is 1,260 crore, priced between ₹10 and ₹11; this excludes the shares purchased by anchor investors. The FPO needs a subscription of 90 per cent to go through. The response of investors at the moment is tepid.

Also read:Institutional investors warming up to Voda Idea FPO?

To fund recovery

The funds, if they come through, will pave the path of recovery for Voda Idea. The company plans to extend its 4G network in areas where its coverage is weak. The operator has been losing subscribers due to gaps in 4G network. In its red herring prospectus, Voda Idea stated that it aims to add 26,000 4G sites using these funds. Vi also has several network payments coming up, which it will not be able to meet without the FPO funds.

Also read: Vodafone Idea: Will not flounder, but will it flourish?

Govt support

The critical question for investors is whether these funds will be able to improve Vodafone Idea’s 4G network enough to arrest subscriber loss, particularly in rural areas where its 2G clients are unable to upgrade. It is also important that Vodafone Idea continues to get government support.

Akshay Moondra, CEO, Vodafone Idea, in his comments before the FPO, had said that it expects relief from the government to continue when AGR and spectrum dues come up.

On Thursday, the Vodafone Idea share price ended 2.17 per cent higher at ₹13.20 apiece on the BSE.