Piramal Healthcare Buys 5.5% Stake In Vodafone Essar Piramal Healthcare Limited has acquired 5.

5% stake of Vodafone Group Plc inVodafone Essar Limited for Rs.2,856 Cr (Approx $ 640 Mn), valuing VEL at $11.6 Bn (Rs.52,500 Cr). Post deal, Vodafone will hold 69.5% in VEL, as Indian law doesn't allow foreign companies to own more than 74% in a local mobile-phone operator. Piramal Healthcare has an option to exit its investment in the company at the time of an initial public offering or to sell the stake back to Vodafone. Vodafone Essar’s IPO will depend on the $2.5 Bn tax claim that the Indian government has imposed on the company, and which is being contested in the Supreme Court. This year in March, Vodafone Group Plc bought Essar Group's 33% stake in JV Vodafone Essar, for $5 Bn in cash, increasing its stake from 42% to 75%. In 2007, Vodafone bought a 67% controlling interest for $10.9 Bn in Hutchison Essar which was renamed as Vodafone Essar and gave option to Essar to sell its entire stake for $5 Bn or to dispose of part of the 33% shareholding at an independently appraised fair market value. The average market cap to sales ratio of listed peers like Bharti Airtel , Idea Cellular, Tata Communications, Reliance Communications and others is in the range of 1.68 to 2. Vodafone Group had bought 33% stake for $5 Bn, valuing VEL at $ 15 Bn and sold 5.5% stake for $640 Mn, valuing VEL at $ 11.6 Bn. In FY10-11, PHL sold its healthcare solution business to Abbot for $ 3.8 Bn and sold stake in Piramal Diagnostics Services Private Limited to Super Religare Labs for Rs. 6.0 Bn. PHL is planning to enter into the financial services sector through a fully owned subsidiary company. It will set up NBFC for lending to infrastructure sector and to other sectors and will also get into fund management for real estate and infrastructure sector. It is in process of acquiring Indiareit Fund Advisors Pvt. Ltd. and Indiareit Investment Management Company for Rs. 2.3 Bn. PHL acquired assets of Biosyntech for C$ 4.7 Mn. Piramal Healthcare had earlier acquired 17% stake in BioSyntech in 2006. This investment gave Piramal the rights for the marketing, sales and distribution of current and future products of BioSyntech, for India and some neighbouring Asian markets. Recently, Piramal Healthcare was planning to buy Enam Financials's 12.5% stake in ING Vysya Life Insurance Company Limited. Other holders in ING Vysya includes Exide Industries (50% stake), Hemendra Kothari (11.5% stake) and rest is owned by ING (26% stake). In June, Reliance Industries Limited acquired Bharti Enterprises Limited's 74% stake in its general insurance and life insurance ventures with France-based AXA. In March, Japan-based Nippon Life Insurance Company acquired 26% in Reliance Life Insurance for $680 Mn (Rs.3,062 Cr). PHL's cash on hand as on March 2011 is Rs. 17.7Bn as compared to FY10 where cash on hand was Rs.441 Mn. The current market cap of the company is Rs.7,818 Cr and it posted total revenue of Rs.334.83 Cr with PAT of Rs.101.09 Cr for quarter ending June 2011. PHL's peer Religare, have been on acquisition spree and have been acquiring companies in the BFSI and the healthcare domains. Super Religare bought out Dubai-based Mena Healthcare facility for $20 Mn in late 2008. Recently, Religare Capital Markets Limited acquired a majority stake in South African broking firm, Noah Financial Innovation (Proprietary) Limited ('Noah').

Vodafone Group Plc has bought Essar Group’s 33% stake in JV Vodafone Essar Ltd (VEL), for $5 Bn in cash. With this deal, Vodafone's stake in the company has increased from 42% to 75%. Standard Chartered Plc advised Essar Group on the transaction, while Vodafone was advised by Goldman Sachs Group Inc. Essar group exercised its underwritten put option over 22% of VEL, following this Vodafone has exercised its call option over the remaining 11% of VEL owned by the Essar Group, resulting in a total cash payment of $5 Bn. In 2007, Vodafone objected Essar’s plan to place its 33% in Indian Securities. In 2007, Vodafone bought a 67% controlling interest for $10.9 Bn in Hutchison Essar which was renamed as Vodafone Essar and gave option to Essar to sell its entire stake for $5 Bn or to dispose of part of the 33% shareholding at an independently appraised fair market value. Vodafone's is also denying $2.5 Bn tax that is due on the 2007 Hutch-Essar deal transaction, which Indian tax authorities are claiming. With Essar's exit, Vodafone has over 130 Mn subscribers and its India partner may increase its stake or there can be IPO in VEL. In 2009, Vodafone exited the Bharti Group partly in which it was holding 10% stake, while it's indirect stake in the group's mobile arm, Bharti Airtel, is still there. Indian law doesn’t allow foreign companies to own more than 74% in a local mobile-phone operator so Vodafone may have to look for another domestic partner to remain compliant with the FDI norms in the telecom sector or its Indian partner may increase its stake. Vodafone had already set aside the $5 Bn cash payment within its net debt of 30 Bn pounds ($48 Bn). Vodafone is planning to exit from French mobile-phone operator SFR, where Vodafone holds 44% of SFR, while rest is owned by Vivendi.

Mahanagar Telephone Nigam Limited (MTNL) through its Mauritius arm Mahanagar Telephone Mauritius Ltd (MTML), is planning to buy 51% stake in Zimbabwe's state-owned landline operator, TelOne Telecommunication Limited. This is MTNL's second attempt to enter Africa. In 2006, MTNL failed to bag a mobile licence in Kenya and in 2007, it failed to buy a controlling stake in Telkom Kenya. TelOne provides telephone, fax, internet, data, and satellite services to business and residential customers. It was recently granted a GSM mobile permit. Recently, TelOne launched fibre-optic link to East African Submarine System (EASSy) international undersea cable via Mozambique. TelOne, which owns a stake in EASSy through the West Indian Ocean Cable Company (WIOCC) consortium, has been allocated initial capacity of 2.48Gbps (16xSTM-1s) on the cable, which it expects to increase to 15Gbps in the next ten years MTNL's deal would only happen after launch of MTNL's GSM operation in Mauritius. MTNL is looking to invetst around $20 Mn for its 200,000 lines GSM launch. Currently, MTNL runs a mix of CDMA mobile, landline, long distance operations and internet services in Mauritius. MTNL's current market cap is Rs.2,784 Cr. It posted total revenue of Rs.754 Cr with net loss of Rs.1,099.58 Cr for FY2011.

US-based Providence

Equity

Partners may

exit

from Idea

Cellular Ltd.

Providence through its investment arm P5 Asia Investment (Mauritius) Ltd holds 9.99% in Idea Cellular and the stake is valued at around Rs.2,684 Cr at Idea's closing price of Rs.81.35 per share on Friday. Providence had bought 15% in Idea Cellular in 2006 for around Rs.1,800 Cr and diluted 5.01% in various tranches in 5 years. Idea's Promoters hold 46.04% in the company through various entities - Aditya Birla Nuvo Ltd (25%), Birla TMT Holdings Pvt Ltd (8.58%), Hindalco Industries Ltd (6.91%), Grasim Industries Ltd (5.18) and Kumar Managalam Birla (0.01%). In May there were reports that Malaysia's Axiata Group Bhd (earlier Telekom Malaysia) may also sell around 5% stake in Idea. Axiata holds 19.8% in Idea via TMI Mauritius Ltd (14.07%) and TMI India(5.01%). Recently, the Delhi High Court had asked the company to transfer all six overlapping licences of Spice Communications, company which it controls, to DoT and get approval from the department before transferring them back. The six overlapping licences are Andhra Pradesh, Karnataka, Delhi, Maharashtra, Punjab, Haryana and Kerala. These six circles came to the company after it acquired 41.09% in Spice Communications in 2008. Idea and Spice had procured these licences in January, 2008, under former Telecom Minister A Raja, who has been arrested on charges of irregularities in distribution of 122 new licences along with 2G spectrum. The merger between Idea and Spice hit several regulatory hurdles as both held overlapping licences and spectrum in various circles. As of March 31, 2011, Idea Cellular has 8,95,03,318 mobile subscribers.

Providence invests in media, entertainment, communication and information service companies. The fund recently invested Rs.260 Cr in Mumbai-based UFO Moviez India Ltd, a chain of satellite based digital cinemas. The fund also has investments in Indus Towers Ltd and Aditya Birla Telecom Ltd.