Vodafone May Seek to Buy Out Indian Partners

Published on: 1st Jan 1970: 1:33am

­Vodafone is reported to be in talks with a minority partner in its Indian subsidiary to buy out the 33% stake held by the Essar Group. Although the Essar Group has a "put option" to force Vodafone to buy its 33% stake, current Indian government rules forbid a foreign shareholder from owning more than 74% of the company.

Therefore, it is being reported that Vodafone has talked to the chairman of India's Max Group, Analjit Singh about a joint purchase of the stake to stay within the legal limits.

Analjit Singh owns around 7% of Vodafone Essar as a nominee shareholder. An unnamed source told the Economic Times that Vodafone directly and indirectly through its nominee shareholder - Singh - can buy Essar's entire stake and this can be done without breaching the rules in the telecom sector.

The Ruias-controlled Essar Group is known to have wanted to sell its stake in the joint-venture and has been trying to get a market valuation which could be higher than the US$5 billion that it could secure by default with the put-option. However, Vodafone's write down of its valuation in the stake is supported by a recent JP Morgan report, which suggests the Essar stake could be worth as little as US$2 billion.

On the web: Economic Times

 

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