The foreign equity in the company would increase after the proposed IPO, making it mandatory for Spice Telecom to get a prior approval from FIPB.
FIPB has approved the company's proposal for the consideration and approval of the Finance Minister subject to the compliance with FDI norms in the telecom sector, government sources said.
Spice Telecom, which had sought the approval in the new name of Spice Communications Ltd, is proposing to offer its shares to qualified institutional buyers, including FIIs and Mutual Funds, non-institutional investors and retail investors including NRIs.
After the proposed IPO, the foreign holding would increase to 74 per cent of the total post-issue equity capital, from 73.78 per cent currently.
As per the country's FDI policy, FDI up to 49 per cent is permitted in the telecom sector under the automatic route and up to 74 per cent with prior approval of FIPB.
The FIPB approval follows a communication from the department of telecommunications in support of the proposal subject to the compliance with FDI norms and SEBI guidelines for the public issue.
Spice is providing mobile services in Punjab and Karnataka and plans to raise funds from a public issue of 13.79 crore (137.9 million) for expanding its business operations in the telecom sector.
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