Vodafone Faces Delay in Securing Permission for Essar Group Buyout

India's Foreign Investment Promotion Board (FIPB) has refused to grant approval to Vodafone's recent decision to buy out part of the Essar's Group holdings in their joint venture.
Vodafone had offered US$1.26 billion for the 11% stake in
Although Vodafone has outlined how it will remain below the 74% limit for foreign shareholders, any transaction where a foreign company has over 49% of an Indian company requires permission from the FIPB. That regulator has now said that it is waiting for comments from the Home Ministry and Telecom Ministry.

The specific request being considered by the FIPB was for Mauritius based Prime Metals, an indirect subsidiary of Vodafone International to buy a 5.48% stake in Vodafone-Essar owned by ETHL Communications Holdings.

The deal will also need to get clearance from Cabinet Committee on Economic Affairs (CCEA).

Following regulatory approval and subsequent closing of these transactions, Vodafone will own 74% of VEL directly via its subsidiaries. The remaining 26% of VEL will be majority-owned and controlled by Indian shareholders.