Tata Capital invests in Vodafone Idea bond issue

Mumbai: Tata Capital pumped in about ₹500 crore into Vodafone Idea’s latest bond sale, people familiar with the ₹3,300-crore fundraising told ET, demonstrating increasing non-bank exposure to stressed but important companies that are otherwise struggling to raise funds from mainstream banks.

JM Financial Credit Solutions, Aditya Birla Capital and Hero Fincorp committed roughly ₹400 crore each, while Nomura Capital participated across both tranches through its NBFC and foreign investor route.

Apart from NBFCS, the issue saw interest from mutual funds and foreign investors for whom bonds were privately placed by Vodafone Idea’s wholly owned unit, Vodafone Idea Telecom Infrastructure. The sale was structured in two secured tranches. Series A comprised ₹3,000 crore of notes carrying a 12% coupon, while Series B included ₹300 crore paying 7%. The securities have a tenor of about 21 months and carry a call option exercisable after one year. Proceeds will be used to repay business consideration to Vodafone Idea following the transfer of fibre assets to the infrastructure arm and will enable the telecom company to support its capital expenditure (capex) plans and business growth. The transaction was arranged by JM Financial Products.

The deal shows rising risk appetite among NBFCs and mutual funds chasing higher yields, as banks remain constrained by exposure limits and asset-quality concerns. Vodafone Idea continues to engage lenders for long-term funding to support capital expenditure. Despite government relief through moratoriums and equity conversion, the telco remains dependent on asset monetisation and structured debt to meet its funding needs.

The Supreme Court recently said the government could consider Vodafone Idea’s request for relief on its adjusted gross revenue (AGR) dues, including potential waiver of interest and penalties, as the telecom operator continues to grapple with liabilities arising from the 2019 ruling that expanded the definition of revenue for levy calculations. In May, it secured board approval to raise ₹20,000 crore through equity or debt, even as the government in April converted a portion of its spectrum dues into equity, increasing its stake in Vodafone Idea to 48.99%.