Piramal Healthcare buys another 5.5% in Vodafone for Rs 3,007 cr

Piramal Healthcare on Saturday bought an additional 5.5 per cent stake in Vodafone India for Rs 3,007 crore, taking its holding in the company to 11 per cent.

The Vodafone group said this transaction completed the exit of the Essar group as a shareholder in Vodafone India. In August last year, Vodafone had sold to Piramals 5.5 per cent of the 11 per cent stake it had acquired from Essar. The second deal would sell the remaining stake held by Essar’s ETHL Communications Holdings, to Piramal Healthcare.

“The transaction follows the settlement between Vodafone and Essar over the sale of Essar’s approximately 33 per cent stake in Vodafone India, announced in July 2011, and the purchase by Piramal of approximately 5.5 per cent of Vodafone India from Essar in August 2011,” Vodafone group said in a statement.

This transaction offers Piramal various exit mechanisms — including both participation in Vodafone India’s potential initial public offer (IPO) and a sale of its stake to Vodafone Group.

Piramal Healthcare’s total investment in Vodafone India would now be around Rs 5,900 crore. But, this investment by the healthcare company varies from its earlier one in terms of valuation. In the August deal, Piramals had paid around Rs 2,893 crore for 5.5 per cent stake. This time, it has paid around a Rs 100 crore more.

This increase in valuation could have come because of the recent victory of the telecom major in its long standing court battle with the tax authorities. Without the burden of a tax claim from the IT department, which was as high as Rs 11,000 crore, Vodafone’s India subsidiary has become much more attractive, according to analysts.

Though Vodafone Plc has been tight-lipped on the timing of its India subsidiary’s IPO, sources say an IPO may come through only in the next calendar year, given the volatility in the equity markets at present.

Piramal Healthcare Managing Director Ajay Piramal could not be reached for comments. At the time of his company’s first round of investment in Vodafone, he had clearly mentioned that it was a financial investment that had a good return possibility.

Piramal’s stake buy in Vodafone, in two tranches, is its second investment in an unrelated business. Earlier, it has bought private equity companies IndiaReit Fund Advisors and IndiaReit Investment Managers.

In 2010, Piramal had sold its Indian formulations business to US-based Abbott Laboratories. It had said it was sitting on a cash pile of Rs 10,000 crore before the August deal. Since then, it had been looking for investments outside the pharmaceutical sector. Also, it had recently announced its foray into the financial services segment.