Piramal Healthcare Limited has acquired 5.5% stake of Vodafone Group Plc in Vodafone 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%.

Transaction Reference: Press Release

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').

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