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FIPB approval for Vodafone, Tesco proposals

U.K.-based Tesco Plc became the first global retailer to get approval from the Foreign Investment Promotion Board (FIPB) to enter the domestic multi-brand retail sector.
The FIPB also, on Monday, cleared Vodafone’s Rs.10,141-crore plan to buy out minority shareholders in its Indian arm.
A decision on the proposal of HDFC Bank to increase the foreign institutional investor (FII) holding limit beyond the existing 49 per cent in the bank was, however, deferred, Finance Ministry sources
said.
Tesco’s plans to initially invest $110 million in the multi-brand retail foray, including for the acquisition of 50 per cent stake in Tata group firm Trent Hypermarket Ltd.
As regards to Vodafone, the FIPB has given the go ahead to the British telecom major to buy out minority shareholders like Ajay Piramal and Analjit Singh in its Indian arm at an estimated cost Rs.10,141 crore.
Mr. Piramal holds 10.97 per cent stake in India’s second-largest telecom company by subscribers, while Mr. Singh, who is Vodafone India’s non-Executive Chairman, holds 24.65 per cent. Vodafone Group Plc will pay Mr. Singh Rs.1,241 crore and Piramal Enterprises Rs.8,900 crore for their stakes in Vodafone India as part of a proposal.
However, since the investment is of more than Rs.1,200 crore, the company’s proposal also requires clearance from the Cabinet Committee on Economic Affairs (CCEA).
CGP India Investments Ltd, an indirect Mauritian subsidiary of Vodafone International Holdings BV, had sought FIPB approval to buy the stake held by minority shareholders in Vodafone India.
The FIPB has also approved foreign investment proposals of Johnson & Johnson.
Meanwhile, a Tesco spokesperson said, “Tesco is pleased that the FIPB has agreed to our proposal. This will now allow us to work on the practicalities of setting up the joint venture with Trent. Any such announcement will be made in the usual way.” Reacting to the decision, a Vodafone group statement said: “We are pleased to have obtained FIPB approval to increase our stake in Vodafone India. The CCEA still has to endorse this decision before either transaction can take place.” — PTI

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