VCCircle

Finally the last hurdle in the Vodafone-Hutch deal has been cleared. The Foreign Investment Promotion Board (FIPB), which approves the foreign direct investment proposals, has given its go-ahead to Vodafone to acquire 52 per cent equity stake in Hutchison Essar.

The deal was held up since the government asked for clarifications on the 15 per cent held by Hutcison-Essar CEO Asim Ghosh and Max India's Analjit Singh. The latter two are holding the stake for Vodafone, and the government was of the view the total stake owned by foreign entities in Hutchison Essar were more than 74 per cent, which is the maximum FDI limit in telecom. Essar Group owns 33 per cent, but 22 per cent of it is held as foreign equity.

However, FIPB has finally ruled that the stakes owned by Ghosh and Singh are Indian and not part of the Vodafone stake. But there is a caveat. Whenever Ghosh and Asim want to sell the stake, they need the government's prior approval.

Some details here.