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Essar hires StanChart to value JV with Vodafone before selling stake

On the ohter hand, Vodafone has hired Goldman Sachs to determine the Indian group's value in the joint venture - a move to help Essar part sell its stake.

twitter-logoPTI | February 2, 2011 | Updated 12:49 IST

Essar group is understood to have appointed Standard Chartered bank, while UK-based Vodafone has mandated Goldman Sachs for
determining the value of their telecom joint venture - a move that will enable the Indian firm to part sell its stake.

Essar holds 33 per cent stake in Vodafone-Essar, which offers pan-India mobile telecom services and has over 124 million subscribers. According to sources, the banks have been appointed to independently determine the valuation of Essar's equity portion.

Essar, meanwhile, has asserted that there was no change in its plan to merge Essar Telecom Holding with the listed group firm ISL as an exercise to determine valuation of its stake in Vodafone-Essar.

"There is no change in our plans to merge Essar Telecommunications Holding Pvt Ltd (ETHPL) with India Securities Ltd (ISL).The investment banks are free to choose whether or not to consider the listed value of ISL in their fair value determination," Essar spokesperson said.

When asked whether the company has appointed the investment banker, the spokesperson declined to comment.  Similarly, it could not be ascertained whether Vodafone has given mandate to any banker.

Essar proposes to merge ETHPL, which has 11 per cent stake in Vodafone-Essar, with ISL in order to find out Fair Market Value of its stake in the JV. The move was opposed by British telecom giant Vodafone, saying this would distort the JV's valuation.

Vodafone-Essar is the third-largest telecom operator in India. Vodafone had bought nearly 67 per cent stake from Hutchison in 2007, while Essar continues to hold the rest.

Vodafone had earlier complained to market regulator Securities and Exchange Board of India and the Bombay Stock Exchange about Essar's plans to transfer 11 per cent stake to ISL, saying it was not disclosed by the Indian partner.

"Vodafone has written to both BSE and Sebi to express its concerns regarding reverse listing of ETHPL (which owns an
indirect 11 per cent in Vodafone-Essar) into ISL and has asked for the matter to be examined," Vodafone had said recently.

Essar had hit back saying, "The merger scheme between ISL and ETHPL is fully compliant with all applicable Indian laws,
capital and financial sector regulations."

The Ruias-led group had also alleged that the British firm wants to acquire 100 per cent stake by keeping its valuation
artificially low.

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