Two CCEA Approvals To Help India Get An FDI Flow Of Rs 7930 crore.

The Cabinet committee of economic affairs (CCEA) has approved the acquisition of GlaxoSmithkline Pharma’s 24.33% stake by its Singapore MNC. This deal would be subject to SEBI regulations and would lead to foreign direct investment of Rs. 6390 crore in the country. Glaxo is purchasing the stake via GlaxoSmithKline Pte, Singapore and promoters currently hold 50.67% stake. Promoters have moved the proposal to acquire the stake in December 2013 and open offer in this regard has been floated. 

CCEA has approved the acquisition of subsidiary company by way of voluntary open offer under SEBI (SAST regulations). Singapore’s company wants to acquire around 2.07 crore shares that represent 24.33% voting shares so it comes under substantial acquisition of shares and takeovers categories that require government’s nod. This is mooted a big deal in Indian pharma sector, as currently FII holds 23.76% stake while domestic institution has 10.21% holding in the company. 

In another development, the CCEA also approved the complete acquisition by Hitachi consulting software services and Hitachi Limited, Japan to Prizm Payment Services. These companies as a group would purchase 100% stake in the Indian company at around Rs 1540 crore. With these two deals, India would get an FDI flow of staggering Rs.7930 crore. This would certainly come as a breather for the government, which is pushing for FDI inflow for quiet sometime now.