Vodafone Group and Piramal Healthcare today announced that the latter has agreed to purchase approximately 5.5% of the issued equity share capital of Vodafone India Limited (VIL) from Essar for a cash consideration of approximately Rs 3007 crore (£385 million), taking Piramal’s total shareholding in Vodafone India to 11%.

The transaction follows the settlement between Vodafone and Essar over the sale of Essar’s approximately 33% stake in VIL, announced in July 2011, and the purchase by Piramal of approximately 5.5% of the issued share capital of VIL from Essar in August 2011. This completes the exit of the Essar group as a shareholder in VIL.

The transaction contemplates various exit mechanisms for Piramal, including both participation in a potential initial public offering of VIL and a sale of its stake to Vodafone.

Vodafone last year bought 22% from the Essar Group and Piramal bought 5.5%. The world's biggest cellular carrier by revenue, Vodafone is the largest overseas corporate investor in India. Vodafone, which entered India in 2007 when it bought control of Hong Kong-based Hutchison Whampoa Ltd's India phone business, is the second-largest player by revenue market share behind Bharti Airtel.

Vodafone has said it plans to take its India unit public but has not set a timeframe.

The Vodafone stake buy is the cash-flush drugmaker's second unrelated investment after it bought PE firms IndiaReit Fund Advisors and IndiaReit Investment Managers.

The company, which last year bought about 5.5% in Vodafone from Essar, was sitting on a cash pile of Rs 10,000 crore, it said last August.

Piramal sold its Indian formulations business to US-based Abbott Laboratories in 2010.

It has been looking for investments outside the pharmaceutical sector and had recently announced a foray into the financial services segment.