The Telegraph
Tuesday , June 11 , 2013
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Mukesh vs other Anil

- Giants show interest in HPL stake
Mukesh Ambani and (right) Anil Agarwal

Calcutta, June 10: Bengal’s showpiece but stricken project has set the stage for a possible bidding race between Mukesh Ambani and Anil.

Not the Ambani brother but Anil Agarwal, whose Cairn India and Mukesh’s Reliance Industries Ltd are among the companies that have formally taken the first formal step to show interest in bidding for the Bengal government’s stake in Haldia Petrochemicals Ltd (HPL).

Others in the race are public energy giants Indian Oil Corp, GAIL India and ONGC. Naveen Jindal’s Jindal Petroleum also is said to have evinced interest. Industries minister Partha Chatterjee said the Essar group had also shown interest but the company did not confirm if it had formally expressed its willingness.

At least five firms communicated their decision today, the last date for submission of expression of interest. Deloitte Touche Tohmatsu received the communiqués as the transaction adviser to the West Bengal Industrial Development Corporation, which holds a 39.99 per cent stake in HPL on behalf of the government.

If any of these companies win the Bengal government’s share, it will emerge as the second largest shareholder after The Chatterjee Group (TCG) of Purnendu Chatterjee.

Along with financial institutions, the winner of the bid can actually control the management of the company. Besides, if one of the heavyweights picks up the government stake, it is expected to eventually try to buy out other big stakeholders.

The response from the prospective bidders buoyed the Mamata Banerjee government that was desperately looking for big-ticket investors.

Minister Chatterjee said: “We are excited at the response. All the companies are well-known in the field of oil and gas. This demonstrates that investors have confidence in Mamata Banerjee’s government.”

The state’s stake in HPL, including equity and preference shares, had been valued at Rs 946 crore. Although heavy losses in the past four years have eroded the value of the shares in HPL, the constellation of bidders could well bring a windfall to the state coffers.

A successful completion of the divestment process will not only provide a booster shot to Bengal’s anaemic industrial health but also release resources that could be spent on development projects.

However, the submission of an expression of interest is only the first step in the long-drawn divestment process that might stretch for six months.

The timeline can lengthen if fresh legal complications crop up as the existing private investor in HPL, TCG, is knocking on several legal doors to keep the divestment process at bay.

In the second phase, the interested companies will carry out due diligence, poring over the books of HPL and visiting the plants before filing a final price bid.

Purnendu Chatterjee’s TCG will be offered the option of matching the price offered by the highest bidder. If TCG does not exercise its right within a month, the shares will be sold to the highest bidder.

Industry analysts said Reliance, IOC and Cairn are likely to be aggressive in their bidding as the acquisition will help derive synergy from their existing Indian operations.

If all the prospective bidders stay the course, Bengal could witness a battle of behemoths.

IOC already holds an 8.8 per cent stake in HPL. Cairn India is owned by London-based billionaire Anil Agarwal who started off his business career from Calcutta.

Agarwal’s Vedanta group is the latest entrant in India’s energy space with the acquisition of Cairn, the largest producer of oil in the country from onland blocks, drilling the arid desert of Barmer in Rajasthan.

Vedanta Resources, listed on the London Stock Exchange, features as one of the top 100 firms. It recorded $14 billion in revenue last year. The group has interest in aluminium through Balco and Sterlite, zinc through Hindustan Zinc, iron ore through Sesa Goa, apart from Cairn. It also owns a copper mine in Zambia.

Ambani’s RIL posted $66.68 billion in turnover last year, with refining and petrochemicals contributing the lion’s share. It also has interests in telecom and retail.

Purnendu Chatterjee is believed to have sounded out Agarwal to act as a white knight in the possible battle for the control of HPL. However, Agarwal was reluctant but Purnendu Chatterjee, sources said, approached him again earlier this year when the Bengal government kicked off the stake sale process.