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Piramal sees 20% return from Vodafone deal

Piramal sees 20% return from Vodafone deal

"We are acquiring a 5.5 minority stake in Vodafone for Rs 2,856 crore. It is a minority stake. We expect 17-20 per cent return from the Vodafone investment over the next two years," Piramal Group promoter and Chairman Ajay Piramal said.

Piramal Healthcare on Thursday said it expects about 20 per cent return from its Rs 2,856-crore investment for buying 5.5 per cent stake in Vodafone India in the next two years.

The company also said that it will put in Rs 7,000 crore in its pharmaceutical business by 2016.

"We are acquiring a 5.5 minority stake in Vodafone for Rs 2,856 crore. It is a minority stake. We expect 17-20 per cent return from the Vodafone investment over the next two years," Piramal Group promoter and Chairman Ajay Piramal said.

Piramal said the company would not take a board seat.

On Wednesday, Vodafone and Piramal issued a joint statement announcing the latter's acquisition of around 5.5 per cent stake in the country's second-largest mobile operator by revenues and market share.

Hinting at a possible sale of his Vodafone stake, he said, "You have heard Vodafone talking about an IPO (in the past) ... Therefore, we are assuming that this IPO will take place anywhere in the next 12-24 months."

"This is where we could participate in or we could participate with Vodafone and get an expected return. Somewhere, we believe, (the return) should be in the range of 17-20 per cent."

"The deal is a strategy to deliver superior return from our surplus returns," he said, adding it highlights the trust placed by global companies in Piramal's values, ethics, corporate governance and good reputation."

Under the deal, Piramal can exit its stake at the time of an IPO by Vodafone, which is slated to hit the primary market late this year or early 2012. It can also exercise an option to sell the stake back to Vodafone, besides opting to exit even if Vodafone does not go in for an IPO, Piramal said

"Including receivables, Piramal Healthcare now has a cash balance of Rs 10,000 crore from the Abbot and PDSL deals, after distributing Rs 2,700 crore to shareholders."