Ruias eye war chest for Hutch

The race for Hutchison's stake in Hutchison Essar Ltd, its Indian joint venture, is hotting up, with the Ruias believed to be looking at buying out their partners' 67 per cent equity stake - in case they sell - for which they plan to approach banks.

Hutchison holds a 52 per cent stake, while another 15 per cent is held by Analjit Singh and Asim Ghosh together.

The move comes after a long list of contenders have reportedly shown interest in buying the Hutchison stake in Hutchison Essar Ltd, which include a PE fund like Blackstone, buyout funds like Texas Pacific and Kohelberg Kravis Roberts,  with the Anil Ambani group, and Malaysian telecom giant Maxis.

A spokesperson for the Essar group, when contacted, declined to comment. The Ruias have the first right of refusal to buy the Hutch stake in Hutchison-Essar in case it wants to pull out.

In another development, Egyptian Foreign Minister Ahmed Aboul Gheit will be coming to India soon and may raise the issue faced by telecom giant Orascom on security, which has checked the Egyptian company's move to play a larger role in Hutchison Essar (in which it holds equity indirectly through Hutchison Telecommunications International Ltd).

Security concerns had been raised over its presence in Pakistan and its attempt to enter the country through the backdoor.

Orascom, however, has declared that it will reduce its equity holding in HTIL - the company through which Hutchison controls its joint venture in India - though it will still have enough holding (around 12 per cent) to exercise the first right of refusal in case Hutchison decides to pull out of HTIL.

Sources close to the development said, "Hutchison has been approached by various equity funds and telcos for buyout of its equity in India. They might do so at an attractive price." At the same time, Hutchison executives said the company had not taken any decision to sell its stake in Hutchison-Essar.

Sources said the Ruias would play a crucial role as their 33 per cent equity meant they could block by a special resolution all important decisions of the buyer of Hutchison's stake until they had their way.

Merchant bankers close to the discussions said the Ruias were weighing the various options. A buyout of Hutchison will come with the accompanying risk of taking a large debt on their books. Informal meetings with bankers have already started to look at the funding options.

The Ruias could also rope in other partners to jointly buy out the stake, they added. Of course, the other option is to hold on to the shares - with valuations rising - as investors and sell it later.

The Ruias have also decided to run BPL Ltd, which they bought over, as a separate entity, rather than merging it with Hutchison Essar.