Hutch in talks with suitors

Vodafone and a consortium of private equity funds led by American Texas Pacific Group have forged ahead in talks for acquiring Hutchison Telecom's stake in Indian venture Hutch-Essar, sources close to HTIL said on Sunday.

"Initial talks with Vodafone and equity funds led by TPG have advanced, while the discussions with others are still preliminary in nature," a source familiar with the development told PTI, discarding reports that bids had been made for HTIL's 67 per cent stake in India's fourth largest mobile player Hutch-Essar.

Even as the Indian media was abuzz with reports and speculation that HTIL has received five bids - from Anil Ambani group's Reliance Communications, UK-based Vodafone,

Malaysia's Maxis, Egypt's Orascom and Essar that holds 33 per cent stake in the venture - investment banking sources said: "Everything is just at a preliminary stage".

HTIL has mandated Goldman Sachs for the sale of its stake in the India venture, whose enterprise value is being estimated up to $17-18 billion.

Sources said that TPG, reportedly having a tie up with Maxis too, is also mulling the option of joining equity funds including US's Blackstone and Kohlberg Kravis Roberts.

Earlier, some of these funds were reported to have joined a consortium led by RComm, but there is no official confirmation.

Asked for the reasons for the funds exploring the option of going on their own, sources said that purely as equity investors these funds are unhappy about the hype and hoopla being created on HTIL's stake, as it was pushing up the valuation.

It may be recalled that five equity funds had come together last year to acquire controlling 88 per cent stake in Danish Telecom firm TDC for $15.6 billion.

Meanwhile, another investment banking source said that UBS, mandated by Vodafone as advisor for Hutch-Essar deal for its long association with the UK based telecom giant, could no longer be involved in arranging funds for RComm consortium.

While Vodafone could go ahead with its discussions on HTIL after having made its position public, sources pointed out that RComm would have to await a decision by Ruias on whether or not Essar would exit the venture.

In case Essar decided to stay put, then RComm may not be able to go ahead with the venture due to regulatory norms in India, they indicated.

Sources close to Essar said that no decision has yet been made on the group's position on Hutch-Essar, while the spokesperson declined to comment.

Meanwhile, British newspaper Financial Times reported that RComm was in talks with at least four equity funds - Apax Partners, Blackstone, Carlyle and KKR - for combining forces to make an offer for Hutch-Essar, a smaller rival.

Stating that Hutch-Essar has an enterprise value of $14 billion, the paper said Reliance's talks with these funds underline the likelihood of a bidding war.

The Sunday Times in london reported that TPG had joined a $15 billion auction for Hutch-Essar and quoted sources as saying that the Fund could also be working on its own offer.