UK-based telecom giant Vodafone and Indian conglomerate Essar Group have respectively appointed Goldman Sachs and Standard Chartered to settle valuations issues with regards to their JV, according to a report in the Financial Times. The two banks have…
UK-based telecom giant Vodafone and Indian conglomerate Essar Group have respectively appointed Goldman Sachs and Standard Chartered to settle valuations issues with regards to their JV, according to a report in the Financial Times.
The two banks have reportedly been asked to estimate the value of Essar’s stake in Vodafone Essar. Vodafone Group controls 67% of the venture, the rest of which is owned by Essar.
The UK company has the option to buy Essar’s entire stake by May this year. When the JV was formed in 2007, Essar was given a put option whereby it can either sell its stake to Vodafone for US$5bn or at a market price to be determined by independent assessment.
But Vodafone recently criticised plans by Essar to carry out a reverse listing of its wholly-owned telecom business because it may affect the value of their JV.
Essar is looking to merge unlisted Essar Telecommunications (which owns an 11% stake in Vodafone Essar) with listed financial group India Securities (ISL), in order to assess the value of its stake in Vodafone Essar.
However, the British telco added that such a reverse listing could be misinterpreted as a fair market value of Vodafone Essar, adding that it did not wish for a company in which it holds a majority interest to become the subject of a false market.
Vodafone Essar made headlines last year after India’s Supreme Court asked Vodafone to pay a US$2.5bn tax fine over its stake acquisition in the JV from Hong-Kong-based conglomerate Hutchison Whampoa in 2007.
The companies could not be reached for comment before the press deadline.
