The Telegraph
Since 1st March, 1999
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Buzz of bids for Hutch

Mumbai/New York, Dec 7: Hutchison India may be up for grabs.

Two of the world’s largest private equity firms — the Texas Pacific Group and Blackstone — are considering acquisition of the Indian wireless assets of Hutchison Telecom International, The Wall Street Journal reported on its website.

Blackstone is believed to be teaming up with Anil Ambani’s Reliance Communications Ltd to launch its bid for Hutchison Essar Ltd, the Indian operation.

The report said the deal could top $8 billion, not including assumed debt, which would put it on a par with the valuation of Anglo-Dutch steelmaker Corus which the Tatas are trying to buy.

Hutch officials in India denied knowledge of the bids. Laura Cheung, a spokeswoman, said: “We don’t comment on speculation.”

“We have no comments to offer,” said an official with Blackstone’s office in Mumbai.

Hutch Telecom is 48 per cent owned by Hong Kong tycoon Li Ka-shing. It has a 67 per cent stake in Hutchison Essar while the Ruias of the Essar group hold the remaining 33 per cent.

A 10 per cent chunk of the 67 per cent held by Hutch Telecom is attributable to Orascom Telecom of Egypt which has bought a 19.3 per cent stake in it.

The Ruias also refused to comment and did not want to be drawn into any talk of a possible selloff.

Hutch Telecom has a market value of about $11 billion. A recent Morgan Stanley report valued the company’s Indian assets at 75 to 80 per cent of the value.

There is a ring of plausibility in the connection between Blackstone and Reliance. Blackstone’s India operation is headed by Akhil Gupta, who earlier served as CEO (corporate development) for Reliance Industries Ltd and Reliance Infocomm before the Ambani brothers broke up.

A Reliance Communications spokesperson could not be contacted despite repeated attempts.

Texas Pacific’s chief scout in India is Vivek Paul, former vice-chairman of information technology titan Wipro. Paul’s brief is to look for acquisitions in India.

The Texas Pacific Group and the Blackstone Capital Partners V are listed among the top 15 LBO (leveraged buyout) funds in the world in a study by Sequoia, an independent corporate finance advisory and private equity firm. The study carried out in April this year listed Texas Pacific Group as the biggest with a fund size of 11.5 billion euros followed by Blackstone with a fund size of 9.3 billion euros.

If either of them pull off the deal, it could be touted as the first real leveraged buyout in India.

Hutchison Essar has a mobile subscriber base of over 20 million and has operations in 16 circles.

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