Vodafone Essar’s stake to be transferred to overseas investment company

www.WirelessFederation.com/news: 2.63% of the economic interest of the Essar Group will be indirectly transferred to its mobile network operator Vodafone Essar to its overseas investment company. 49% stake in Essar Telecommunications Holding (ETHPL), which has a 10.97% stake in the Essar Group will be transferred to Mauritius-based Essar Telecom India (ETIL) for INR5.3 billion (USD116 million).

Provisions of the relaxed foreign investment norms according to which foreign investment of less than 50% in an Indian investing company will not be treated as foreign direct investment (FDI) as long as Indian citizens have a 50% stake and the right to appoint a majority of directors in the investing company,  will be used to switch investment.

Currently, 33.02% stake in Vodafone Essar is held by Essar Group and with 22% of that held through ETIL, which is treated as foreign investment. ETIL will acquire  49% stake in Essar Capital Holdings (India) (ECHL) for INR2.8 billion, and a further 49% stake in Essar Satvision (India) after the proposed transaction. ECHL and Essar Satvision will then subsequently purchase a 49% stake in ETHPL.