Tata Capital is investing in the issuance of Vodafone Idea bonds

Mumbai: Tata Capital pumped around ₹500 crore into Vodafone Idea’s latest bond sale, people familiar with the ₹3,300-crore fundraising told ET. This demonstrates an increasing exposure of non-banks to stressed but important businesses that otherwise struggle to raise funds from mainstream banks. JM Financial Credit Solutions, Aditya Birla Capital and Hero Fincorp have committed around ₹400 crore each, while Nomura Capital participated in both tranches through its NBFC and foreign investor route.

Besides NBFCS, there was interest in mutual fund issuance and foreign investors for whom bonds were privately placed by Vodafone Idea Telecom Infrastructure, the wholly owned unit of Vodafone Idea. The sale was structured in two secured tranches. Series A included ₹3,000 crore of notes with a 12% coupon, while Series B included ₹300 crore paying 7%. The securities have a term of approximately 21 months and include a call option that can be exercised after one year. The proceeds will be used to repay the corporate consideration to Vodafone Idea following the transfer of fiber assets to the infrastructure business and will enable the telco to support its capex (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 returns as banks remain constrained by exposure limits and asset quality concerns.

Vodafone Idea continues to engage lenders for long-term financing to support capital expenditure. Despite government relief through moratoria and share conversion, the telco remains reliant on asset generation and structured debt to meet its financing needs.

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