Mumbai, June 30: Hutchison Whampoa has acquired the entire 5.11 per cent stake of Hinduja TMT in Hutchison Essar Ltd in an all-cash deal worth $450 million. With this, the direct shareholding of the Hong Kong-based conglomerate in Hutchison Essar will rise to 47.4 per cent. It will also pave the way for the much-awaited initial public offer of Hutchison Essar.

The deal will take Hutch’s valuation to $8-$9 billion. It would have been higher at $12 billion had it not been for the recent slump in the Indian stock markets.

“We would have been able to clinch the deal for $600 million, according to the higher valuation. However, valuations are subject to market dynamics and even at this deal size, the capital appreciation have been 4-5 times of the acquisition cost,” said Ashok P. Hinduja, chairman of the Hinduja Group.

Hinduja TMT held the stake in Hutchsion Essar through IndusInd Telecom Network Ltd, a special purpose vehicle, held by two wholly-owned subsidiaries, InNetwork Entertainment Ltd and Pacific Horizon Ltd, and the Hinduja Group’s Mauritius- based Kumbat.

The Essar Group was also in the race to buy the stake and was ready to pay a higher amount, Hinduja said. The Ruias of the Essar group hold 33.6 per cent in the company.

Egyptian telecom company Orascom indirectly holds about 10.3 per cent in Hutchison Essar.

Last October, Essar had bought a 3.2 per cent stake in the company from Max India’s Analjit Singh for $147 million. This deal had placed the valuation at about $4-$5 billion.

However, nearly five months after Analjit Singh exited Hutchison Essar, he made a comeback by acquiring an effective economic interest of 8.33 per cent in Hutchison Essar from Kotak Mahindra Bank for Rs 1,019 crore.