Vodafone India may raise $2 billion using IPO route

Vodafone India's stated plan to sell its shares could involve raising of funds to the tune of $2 billion (Rs. 13,300 crore), reported the Mint, citing four sources familiar with the development. The stock offering will potentially be done through the Initial Public Offering (IPO) route by the end of this month or early next month.

Media reports had said on April 8 the parent company Vodafone Group Plc was laying the groundwork for India's largest IPO. However, the firm then had disclosed that the stock offering would be a pure stake sale by the parent firm or involve primary capital raising.

India's second-largest telecommunication company in terms of subscriber base, one of the four sources added, has already asked merchant bankers to submit proposals for the IPO mandate this week. By next week it is expected to shortlist investment bankers to pitch for the final IPO mandate.

In reply to an email enquiry, Vodafone India told Mint: "We have previously said we have started preparations for a potential IPO, which includes private conversations with banks." It added: "But this is a lengthy process and no decision will be made until we are at the end of it."

As all the major domestic and international bankers vie for the IPO, another source confirmed that the telco expects to raise up to $2 billion through this process.

Bloomberg reported that the share sale would provide Vodafone funds to expand in India. The country's rising wages have helped the company's growth in India outpace it in mature Western markets such as the U.K. The news agency, citing sources, added that London-hedquartered Vodafone may sell 10 percent of its India business, and set the valuation of its operations at $20 billion.

Bharti Airtel, India's largest telco by number of subscribers, has a market capitalisation of nearly $21.3 billion (Rs.1.4 lakh crore). Idea Cellular, another thriving teleco, has about $6.2 billion (Rs. 41,315.85 crore) in market cap.