Idea likely to make pre-IPO placement of Rs 375cr

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Idea Cellular, which is in the process of floating an initial public offer, IPO is expected to make a pre-IPO placement of shares to promoters, employees of AV Birla group companies and high net worth individuals, HNIs. The private placement could be up to Rs 375 crore, which would be about 15% of the new equity to be issued for raising funds, reports The Economic Times.

The price at which the placement would be done would be at par or higher than the maximum price of the price band for the IPO. The pre-IPO shares will have a lock-in period of one-year from the date of allotment. Sources say that the pre-IPO placement would be done to ensure that the shareholding of the promoters is kept at a certain level, following the post-IPO dilution and to also issue shares of Idea Cellular to employees of other AV Birla companies.

Idea Cellular is raising Rs 2,500 crore for meeting its expansion needs. This would be scooped up through issue of new equity shares of the company. The equity would be issued though an IPO and may include a pre-IPO placement.

The fourth largest national GSM mobile service provider has an authorised share capital of Rs 4,275 crore. Its paid-up share capital of Rs 2,742.5 crore comprises 225.9 crore equity shares of Rs 10 each and preference share capital of 483 redeemable cumulative non-convertible preference shares of Rs 1 crore each.

Idea Cellular is also in the process of raising the total foreign investment limit in the company to 74%. As per the FDI policy for telecom 74% is the maximum equity investment allowed for foreign investors in a telecom company, which includes both direct as well as indirect foreign investment through domestic investment entities.

As of mid-November, 2006 Idea Cellular had a direct foreign investment of 34.85% in the company. However, the total foreign investment including the indirect holding through its shareholders - Grasim Industries , Aditya Birla Nuvo and Hindalco Industries stood at 47.55%. The promoters - Aditya Birla group, which holds 65.15% stake in the company, would continue to be the majority shareholder after the IPO with more than 51% of the equity. Therein the single largest investor Aditya Birla Nuvo, a publicly listed company, would hold more than 30% stake.