Vodafone Pays $1.5 Billion to Lift Indian Stake
Published on: 10th Apr 2014
By: Ian Mansfield
Indian billionaire Ajay Piramal has sold his 11 percent stake in Vodafone India for 50% more than he bought it in 2011 12.
His Piramal Enterprises company paid Rs 5864 crore for the stake in two separate transactions in in August 2011 and February 2012. He has sold the stake for Rs 8900 crore (USD1.5 billion).
The sale of the stake was long expected as the company originally said that it only invested in Vodafone for the short term, and Vodafone needed a silent investor to ensure that it remained within Indian rules limiting foreign stakes to 76 percent.
Since the Indian government relaxed that regulation and approved Vodafone's application for full ownership of the Indian company, the sale by Piramal Enterprises has been expected to be imminent.
"The equity purchase in Vodafone was consistent with our objective of making investments that offer opportunity to generate attractive long-term return on equity, says Ajay Piramal. "I am glad to say that we have delivered against our targeted returns with this investment," he added,
In technical terms, holding company, Vodafone Essar Ltd (VEL) owns 75.35% of the mobile network (trading as Vodafone India) with the remaining 19.54% stake held by other Indian investors.
Vodafone Group itself owned 89% of VEL and 11% by Piramal Healthcare.
Other shareholders in Vodafone India include Max India's founder Analjit Singh with around 6 percent, with an unspecified stake owned by Analjit Singh, Vodafone India's non-executive chairman.
The Piramal Healthcare transaction lifts Vodafone Group's ownership of its Indian subsidiary to an estimated 75.4 percent.