Essar to encash Hutch stake

Our Corporate Bureau
29 May 2007

Mumbai: Essar Group plans to encash its 33 per cent stake in Hutchison-Essar, its joint venture with UK's Vodafone, to raise around $4.5 billion (Rs 18,000 crore) for overseas acquisitions.

The group recently bought two steel plants in Canada and the US for $3.2 billion and committed $4 billion in Egypt to set up a refinery and steel plant. It is hunting for more global assets.

The group is said to have has appointed banks to advise it on assigning its one-third stake in India's fourth-largest mobile service provider.

An agreement between Vodafone and Essar gives the latter the option to sell its one-third stake in Hutchison-Essar to Vodafone after three years. Essar also has the option to sell between $1 billion and $5 billion worth of Hutchison-Essar shares to Vodafone at an independently appraised value.

The decision by Essar to monetise its Hutchison-Essar stake follows the government approving this month the sale of Hutchison's majority stake in the company to Vodafone, almost three months after the initial agreement.