Hero groups FDI plan to go before cabinet

THE FIPB on Wednesday said it has referred three big foreign investment proposals from Reckitt Benckiser, Hero Investments and the GMR Group totalling Rs 9,720 crore to the Cabinet Committee on Economic Affairs (CCEA) for clearance.

In a meeting held on February 15, Foreign Investment Promotion Board (FIPB) recommended the proposals for consideration by the CCEA as the intended capital infusion exceeds Rs 1,200 crore in each case.

A proposal of Hero Investments (HIPL) for bringing in Rs 4,500 crore as induction of foreign equity in investing company has been deferred for clearance by the CCEA. HIPL is one of the main shareholders of the country's largest two-wheeler maker Hero Honda. It holds 17.33 per cent stake in the company as on December 31, 2010.

In December last year, the promoters of HIPL, the BM Munjal family, had agreed to buy out the entire 26 per cent stake of Japan's Honda in Hero Honda for an undisclosed sum. It is understood that the Munjals are looking to raise funds to finance the buyout through stake sale in HIPL to private equity and other foreign funds.

In another proposal, global FMCG giant Reckitt Benckiser had proposed to bring in Rs 3,300 crore to fund the acquisition of Ahmedabad-based Paras Pharmaceuticals. In December 2010, the UK-based firm had agreed to fully acquire the Indian entity for Rs 3,260 crore. Reckitt Benckiser will make downstream investment through its subsidiary Reckitt Benckiser.

Besides, GMR Airports Holding, which has already got approval for an infusion of Rs 960 crore through issue shares, has sought permission for a further Rs 960 crore for future investments, growth plans of the Delhi and Hyderabad airports and other ancillary activities.