Vodafone considers buyout of its minority partners in India

Vodafone is expected to take advantage of relaxed foreign ownership rules to buy out the minority shareholders in its Indian subsidiary.

Industry sources said that Vodafone is expected to apply to the Foreign Investment Permission Board (FIPB) for authorisation to raise its stake in Vodafone India from 74 per cent to 100 per cent.

Technically, Vodafone Group owns a 64.4 per cent stake in a holding company, also called Vodafone India, and a further 20.1 per cent of the mobile network through other uncontrolled subsidiaries.

Other shareholders in Vodafone India include Piramal Healthcare with 11 per cent and Max India’s founder Analjit Singh owns around six per cent, with an unspecified stake owned by Vodafone India’s non-executive chairman.

Piramal Healthcare has said several times recently that it is looking to sell, and only saw itself as a short-term investor in the company. It also has a put option that would force Vodafone to buy its stake if a stock market listing does not take place by February 2014.

Vodafone’s buyout of its minority partners could cost an estimated US$2 to $2.7 billion.

The company had also previously said that it is looking to list shares locally. It is unclear if buying out the minority shareholders is simply a tidying up exercise before an IPO, or an intention to retain full ownership in the long term.