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Vodafone eyes to float IPO in India
By siliconindia
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Friday, 12 August 2011, 00:57 IST
Bangalore: Eying to float an initial public offering of the unit in India, Vodafone Group PLC has decreased its shares in its Indian operations to hold on to the rules of foreign direct investment, reports Lilly Vitorovich of Wall Street Journal.
The largest mobile operator by profits, made a short declaration which reveals that Piramal Healthcare agreed to procure 5.5 percent stake in Vodafone Essar for $652.8 Million. This will diminish the shareholdings of Vodafone in the Indian unit to 69.8 percent. The widely expected sale was necessary to hold on to India's foreign direct investment rules that at least 26 percent of the business needs to be Indian-owned.
Vodafone and Essar group became a joint venture partner in Indian mobile phone group which was well known as Vodafone Essar. It took the direct ownership of the company to 75.3 percent. The other part is owned by U.K based companies and has minority interest.
Vittirio Colao, the CEO of Vodafone said in the starting of 2011 that an IPO on the Mumbai bourse was "tempting" to extract value out of the business, but cautioned that a clear regulatory framework was needed first.
The company faced lots of difficulties in the year 2007. The group is fighting Indian tax authorities over a demand for up to $2.5 billion related to a possible capital gains tax charge on the company's $11.2 billion purchase of Hutchison Whampoa stake in what is now Vodafone Essar in 2007.
A deal was made to sell the Cayman island company owned by Hutchison to a Vodafone holding company.
Vodafone states that no capital gains tax was unpaid in India and since neither of the companies involved in the deal were Indian.
