Vodafone intends to take advantage of new foreign direct investment rules in India by investing as much as $2 billion (€1.48 billion) to buy out minority shareholders in its Indian unit, reports said this week.
Until recently, foreign companies were permitted to own up to 74 per cent of Indian companies, but in July India liberalised the rules to allow up to 100 per cent ownership in a bid to attract foreign investment.
Citing sources familiar with the matter, the Financial Times said Vodafone intends to exploit the new FDI rule and will file an application with the Indian government's Foreign Investment Promotion Board this month to gain permission to increase in its stake in Vodafone India Ltd. from the current level of 64 per cent.
Billionaire industrialist Ajay Piramal owns an 11 per cent stake, while undisclosed minority shareholders control the remaining 25 per cent. The FT added that one of these minority shareholders is believed to be Analjit Singh, who is also Vodafone India's chairman. Piramal told the FT that he plans to sell the holding to Vodafone next year.
Vodafone's move would come in spite of a rather patchy relationship with the Indian government since it acquired its stake in Hutchison Essar in 2007 for almost $11 billion. The FT noted that the group still has an unresolved $2.6 billion dispute with the government.
Vodafone has so far declined to comment on the reports. The company has previously indicated its interest in increasing investments in its major emerging market operations, including India and South Africa, in the wake of the $130 billion sale of its stake in Verizon Wireless, the FT added.
For more:
- see this FT article (sub. req.)
- see this Bloomberg article
- see this Reuters article
Related Articles:
Vodafone CFO Halford to leave after completing Verizon deal
Vodafone likely to continue shopping spree after securing Kabel Deutschland
Verizon shatters record, sells $49B in bonds to finance Vodafone deal
In wake of Verizon deal, Vodafone turbo-charges network spending with 'Project Spring'
Verizon to buy Vodafone's 45% stake in Verizon Wireless for $130B