Recent changes to India’s regulations regarding foreign investment have allowed UK-based Vodafone Group to increase its stake in its Indian subsidiary, Vodafone Essar, the Economic Times reports. According to TeleGeography’s GlobalComms database, Vodafone had previously been unable to enlarge its holding in the cellco as the Essar Group’s 33% stake in the mobile operator was structured so that 22% was held offshore, filling the 74% foreign ownership quota set by the government. Under regulatory changes made earlier this year, however, indirect foreign investment routed through a company owned by Indians can now be treated as local equity.
On the back of the regulatory changes Vodafone has revealed it will acquire 49% of the holdings of Analjit Singh, who has a 7.58% stake in Vodafone Essar through three separate holding companies, and Asim Ghosh, who has a 4.68% interest in the cellco, again held through three companies. The Vodafone Group will pay a total of INR8.62 billion (USD180 million) for the stake – INR5.33 billion to Mr Singh and INR3.29 billion to Mr Ghosh – which will see it increase its share in Vodafone Essar to 58%, up 6% from the 52% it currently holds. Both Ghosh and Singh applied to the Foreign Investment Promotion Board (FIPB) on 11 September for permission to divest their stakes.