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Updated: Vodafone acquires Piramal & Analjit Singh’s stakes to complete its Indian arm buyout

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Update: Vodafone Group has also bought out Analjit Singh’s 24.65% stake in Vodafone India for Rs 1,241 crore, reports The Economic Times. It also notes the transaction with Analjit Singh is complete and the Piramal transaction is likely to close today. With this, Vodafone Group will now own 100% stake in Vodafone India.

Note that there is a significant difference in valuation between both the transactions. Vodafone India mentions this is because Singh indirectly owns this stake through several companies, some of which have significant debt. It also notes that this is in line with the agreements between both the parties which were submitted to the government in 2007 and 2009, as indicated by the report.

Earlier (April 11): Piramal Enterprises has agreed to divest its entire 11% stake in Vodafone India, comprising 4.54 crore shares, to Vodafone group’s indirect subsidiary Prime Metals Limited for Rs 8,900 crore at Rs 1,960 per share, the company has informed BSE (pdf). This transaction values Vodafone India at Rs 80,939.7 crore or approximately £8 billion.

Piramal which has little to do with the mobile industry, has pocketed a profit of around Rs 3,036 crore from this stake sale, having previously acquired these shares for a total consideration of Rs 5,864 Cr in two tranches during FY12. This translates to about 50% return on investment in almost three years.

It had initially picked up a 5.5% stake for Rs 2,856 crore in August 2011 and had later bought an additional 5.5% stake for approximately Rs 3,007 crore in February 2012.

Vodafone India’s Buyout plans

Piramal Healthcare had picked up this stake since the FDI limit in telecom was then at 74%, which Vodafone had overshot by 4%, following the settlement with Essar over the sale of Essar’s approximately 33% stake in Vodafone India Limited. This had increased Vodafone’s stake to 78%. However, the company has been reportedly looking to offload its stake since April last year.

With India allowing 100% Foreign Direct Investment (FDI) in telecom in July 2013, Vodafone group had sought for FIPB approval to increase its stake in Vodafone India from 64.38% to 100% through its indirect subsidiary CGP India Investments Ltd. It was looking to buy out its minority stakeholders like Piramal Healthcare and Analjit Singh (who owns 24.65% stake) by spending around $2 billion.

The Indian government’s Cabinet Committee on Economic Affairs had approved this deal in February this year, a move which the government expected will bring in approximately Rs 10,141 crore into India.

Vodafone India Revenues

Vodafone India had reported total revenues of £937 million for the quarter ending December 31, 2013, which was marginally down from £947 million revenue in the previous quarter. The data revenues for Vodafone India was at £111 million, same as previous quarter but up 18.1% from £94 million in the same quarter last year. India is currently Vodafone group’s second largest business in terms of data traffic.

There is also speculation that Vodafone Group is in talks to acquire Tata Teleservices. While the telco had declined to comment on this deal, Vodafone CEO Marten Pieters had earlier stated plans to acquire assets of other telcos in India, including spectrum and fibre assets, in order to get a pan-India footprint for data services.

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