Potential equity dilution in Vodafone Idea may keep investors at bay

Vodafone Idea indicated last week that fundraising discussions have picked up pace, but analysts believe that funds will largely come as debt and not equity owing to apprehension among investors with regard to potential equity dilution after the moratorium on regulatory dues end for the company.

Simply put, analysts are factoring in possibilities of further dues conversion into equity by the government in Vodafone Idea and limited possibility of value addition with short-term funds. In case new investors enter the company at this point, there is a possibility that they might see equity dilution if the company issues fresh equity shares to the government in the future.