Two shareholder agreements between multinational and Indian investors have been in the thick of public debate.
Earlier this year, the deal that gave Vodafonecontrol of Hutch Essarran into a spot of trouble. The debate was whether a part of the 15% stake in the telecom company held by Asim Ghosh, Analjit Singh and IDFC was funded by Hutch, which reportedly also had an option to buy this stake later at a fixed price.
Last week, the three-way split in Bajaj Auto shed light on a similar deal that was not known to the public. German insurer Allianz, it was revealed, has got call options to sharply increase its stake in its two insurance joint ventures with Bajaj Auto. Both are in sectors with caps on foreign ownership and there could be more such secretive deals in other joint ventures. Regulators and investors should demand more information. Or, better still, let’s do away with FDI caps that encourage such tangles.