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Hutch in pre-offer merger drill

Mumbai/New Delhi, Feb. 4: All Hutch companies operating in 13 circles of the country will be folded into Hutchison Max Telecom (HMTL) ' to be renamed Hutchison Essar later.

The reorganisation of group companies is seen as the prelude to an initial public offer (IPO) that Hutch plans in India. Estimates put the size of the flotation at Rs 2,250 crore.

The group has completed the entire series of formalities to make Hutchison Max Telecom, which offers mobile services in Mumbai under the Orange brand, its main holding firm now. Investors in other group firms have transferred their shares to Hutchison Max.

The company believes the new consolidated entity will be better placed to access debt and equity markets in India. 'We have created one of the largest mobile operations in the country. We expect the mergers to bring operational synergy, including more efficient management and effective use of resources between various companies,' a Hutch release said. Hutch firms, with over 7.2 million mobile users, are pitted against rivals like Bharti and Reliance Infocomm.

In Hutchison Max Telecom, Hutchison International, owned by Hong Kong baron Li Ka-Shing, controls 42.34 per cent, Essar 26.42 per cent, Kotak Mahindra 22.97 per cent, Hindujas 5.11 and Max India 3.16 per cent.

The partners with smaller stakes would prefer to quit and use the cash freed up to bankroll other businesses. Officials of Essar and Hutchison refused comment, saying it was the mandatory 'quiet period' before the maiden-offer documents are filed by the company.

Merchant banking watchers expect the flotation to come through in the next few months. The key question now is whether the small stakeholders in HMTL will sell out to the Hutch-Essar combine before the offer or choose to put their shares on the block with others in the IPO.

Sebi rules forbid promoters from selling their shares for a few years after a company is listed on bourses. Analjit Singh's Max India needs the money to fund its own plans in life insurance and a host of other businesses.

Unlike Hutchison Max Telecom, no details of the shareholding pattern in Hutchison Essar Ltd were available. 'We have never divulged our shareholding pattern. The information about consolidation was sent from Hong Kong. We cannot say any more than what has been provided,' a company spokesperson said in Mumbai.

As a result of the consolidation, Hutchison Telecom International, the Essar Group, Kotak Mahindra, the Hinduja Group, and Max India will become the renewed shareholders of HMTL in its role as an umbrella organisation.

'All requisite government and regulatory approvals, consent and permissions for effecting the consolidation have been secured,' the Hutch statement put out today said.

Other than Orange in Mumbai, Hutch is the group's main brand. Services under this name are offered through Hutchison Essar Telecom in Delhi, Fascel Limited in Gujarat and Hutchison Telecom East in Calcutta.

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