Tata Capital backs Vodafone Idea with ₹500cr bond investment
What's the story
Leading non-banking financial companies (NBFCs) such as Tata Capital, JM Financial Credit Solutions, Aditya Birla Capital, and Hero Fincorp have together invested around ₹1,300 crore in Vodafone Idea's recent bond issue. The investment comes as a sign of growing interest from NBFCs and mutual funds for higher returns amid exposure limits faced by banks. The money will be used to fund Vodafone Idea's capital expenditure and business expansion plans.
Major investment
Tata Capital's significant investment in Vodafone Idea's bond sale
Tata Capital invested nearly ₹500 crore in Vodafone Idea's latest bond issue. The move highlights the growing trend of non-bank investments in stressed but essential companies that are struggling to secure funding from mainstream banks. Other NBFCs such as JM Financial Credit Solutions, Aditya Birla Capital, and Hero Fincorp also contributed around ₹400 crore each to this fundraising effort.
Diverse participation
Vodafone Idea's bond sale attracts mutual funds, foreign investors
The recent bond sale by Vodafone Idea also drew interest from mutual funds and foreign investors. These were privately placed by Vodafone Idea Telecom Infrastructure, a wholly-owned subsidiary of the telecom operator. The issue was split into two secured tranches: Series A of ₹3,000 crore at a 12% coupon rate and Series B of ₹300 crore at 7%.
Fund allocation
Proceeds from Vodafone Idea's bond sale to support business growth
The proceeds from this bond sale will be used to repay business consideration to Vodafone Idea after its fiber assets were transferred to the infrastructure arm. The funds will also help the telecom company meet its capital expenditure (capex) plans and drive business growth. The transaction was facilitated by JM Financial Products, further highlighting the rising risk appetite among NBFCs and mutual funds for higher yields amid banking sector challenges.
Funding challenges
Vodafone Idea's ongoing search for long-term funding
Vodafone Idea is still in talks with lenders for long-term funding to support its capital expenditure. Despite government relief through moratoriums and equity conversion, the telco still relies on asset monetization and structured debt to meet its financial obligations. The Supreme Court recently said the government could consider Vodafone Idea's plea seeking relief on its adjusted gross revenue (AGR) dues, including waiver of interest and penalties.