Vodafone Group Plc of the UK will buy out Piramal Enterprises 11 per cent stake in Vodafone India for Rs 8,900 crore, giving it full control of the company.
Vodafone will be the first foreign carrier to take full control of an Indian telecom company since the government removed a 74 per cent cap on foreign ownership in the industry last year. The UK firm, which entered India in 2007 by buying the cellular assets of Hong Kong’s Hutchison Whampoa in a $11 billion deal, directly and indirectly owns a combined 84.5 per cent of Vodafone India. Piramal is selling the stake to Prime Metals, which it said is an indirect subsidiary of Vodafone Group.
As Piramal had bought the 11 per cent stake in Vodafone India in two tranches during financial year 2012 for Rs 5,864 crore, it will pocket a capital gain of Rs 4,000 crore with today’s deal. While it paid an average price of Rs 1,290 per share two years ago, it sold the shares at Rs 1,960 per share. Piramal Enterprises shares rose 3.73 per cent to Rs 556.15 on the BSE on Thursday.
“We have delivered against our targeted returns. The equity purchase in Vodafone was consistent with our objective of making investments that offer opportunity to generate attractive long term return on equity,” Ajay Piramal, chairman, Piramal Group, said in a statement on Thursday.