Piramal Healthcare to buy further 5.5% stake in Vodafone India

Within days of Vodafone winning a over $2 billion income tax case, Piramal Healthcare has decided to pick another 5.5 per cent stake in the firm, taking its total holding to around 11 per cent, for Rs 3,007 crore.

Piramal Healthcare will acquire a further 5.5 per cent stake in Vodafone India from ETHL Communications Holdings (Essar) for Rs 3,007 crore.

The transaction follows the settlement between Vodafone and Essar over the sale of Essar's around 33 per cent stake in Vodafone India, announced in July 2011, Piramal Healthcare said in a regulatory filing.

Last year, Vodafone had bought out Indian partner Essar's 33 per cent stake in the joint venture for $5.4 billion.

That transaction took Vodafone's ownership to 75.35 per cent, more than the prescribed Foreign Direct Investment (FDI) limit of 74 per cent.

Piramal Healthcare picked up a strategic 5.5 per cent in Vodafone for $640 million in August 2011. The Piramal investment helped Vodafone meet regulatory requirements.

Under the deal, Piramal can exit its stake at the time of an IPO by Vodafone, which is slated to hit the primary market this year. It can also exercise an option to sell the stake back to Vodafone, besides opting to exit even if Vodafone does not go in for an IPO.

"The transaction contemplates various exit mechanisms for Piramal, including both participation in a potential initial public offering of VIL and a sale of its stake to Vodafone," Vodafone and Piramal said in a joint statement.

UK-based telecom major Vodafone is believed to have roped in investment bank NM Rothschild to assist with the listing plans.

In a landmark judgement, the Supreme Court last month set aside the Bombay high court ruling asking Vodafone International Holdings to pay Rs 11,000 crore in income tax on acquisition of interests in Hutchinson-Essar Limited in 2007 overseas.

A three-judge bench headed by chief justice S H Kapadia had held that the I-T department has "no jurisdiction" to levy tax on overseas transaction between companies incorporated outside India.