Pharma major Piramal Healthcare has agreed to double its stake in Vodafone India by acquiring an additional 5.5% stake in the cellular services operator from Essar for Rs 3007 crore in cash.
At a press conference in Mumbai, Ajay Piramal, Chairman, Piramal Healthcare said the group expects a 17 to 20 percent return from its investment in Vodafone, adding that it is looking to exit Vodafone in the next 12 to 18 months.
Being a short-term investment, Piramal has two options for the exit route- an IPO or to sell stake to other companies.
Moreover the company will not have additional cash left in its balance sheet after it buys a 5.5 percent stake in Vodafone's India unit, Ajay Piramal said.
While the local unit of Vodafone Group needs to adhere to Indian foreign investment rules that cap overseas holdings in an Indian telecom company at 74 percent,Piramal Healthcare has been looking to deploy the cash reserves it piled up by selling two of its businesses in 2010.
"The transaction follows the settlement between Vodafone and Essar over the sale of Essar's approximately 33% stake in VIL, announced in July 2011 and the purchase by Piramal of approximately 5.5% of the issued share capital of VIL from Essar in August 2011," Vodafone said on Saturday.
Piramal Healthcare bought an initial 5.5 percent stake in Vodafone India for Rs 2,856 crore in August 2011, while Vodafone bought out a 33% stake held by former joint-venture partner Essar group in mobile company Vodafone-Essar Ltd.
Piramal Healthcare shares are up over seven percent on BSE today.
Updated Date: Dec 20, 2014 06:24:48 IST