Essar buys Max’s stake in Hutch-Essar

Category: News | No Comments | Posted on October 18, 2005

Continuing its acquisition drive in the telecom sector, the Essar Group clinched a deal to buy 3.16% stake of Max India in Hutchison Essar Telecom for Rs 657 crore putting the valuation of the telecom firm at close to Rs 21,000 crore.

“We have the option of increasing our stake up to 37 per cent in the joint venture entity and we are moving towards this,” he said, adding that after the completion of the transaction, subject to all the necessary clearance, Essar’s stake in the combined entity would increase to 33.58 per cent.

Essar has been on a major investment spree during the current financial year as it bought out a majority stake in BPL for about Rs 4,800 crore followed by Nambiar’s stake in the company for another Rs 100 crore. Earlier this month, Essar sold its stake in BPL to its joint venture with Hutch for $1.15 billion in an all cash deal, ensuring a good return on its short term investment.

The Essar group, which has presence in a variety of sectors like steel, shipping, power and oil & gas besides telecom, has been trying to consolidate its stake in the telecom service space. The consolidation move is also seen as an indication of an impending IPO by Hutchison Essar, the second biggest private sector player in the GSM sector.

Hutchison Essar is in the midst of restructuring including pruning its brands. The company plans to phase out its

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