Infrastructure Development Finance Corporation (IDFC) has exited Hutchison-Essar by selling its stake in the holding company to group firm IDFC Private Equity for around $25m-$30m. IDFC Private Equity has taken on the stake held by IDFC in India’s third largest operator, sources told ET.
IDFC, IDFC Private Equity and SSKI Corporate Finance had jointly promoted an investment vehicle called SMMS Investments for investing in HEL. Through this, they held 2.77% shareholding in the company.
“IDFC had to exit at this point of time. It’s a consolidation issue and IDFC’s stake has been taken by its private equity arm. The stake remains with the IDFC Group,” sources said.
“The shareholding structure has been tweaked and it will not affect the overall foreign direct investment (FDI) in the operator,” said sources familiar with the development. Holdings of the IDFC Group are Indian and it has full legal ownership and unrestricted voting rights.
As per the agreement with Hutchison Telecommunications International (HTIL), which is now exiting HEL, the IDFC group cannot transfer or allot shares in SMMS if it leads to a violation of the overall FDI limit in the company. “This is essentially to ensure that the 2.77% proportionate shareholding in HEL will remain held by Indian residents.
This is reinforced by the undertaking extracted from the IDFC group to ensure SMMS’ status remains as 100% Indian citizen,” HTIL said. IDFC MD Rajiv Lal and HEL MD Asim Ghosh could not be reached for comment. IDFC Private Equity MD & CEO Luis Miranda said he could not say anything on the matter.
IDFC had bought the stake last year after Hindujas said they were keen to sell their 5.11% share in HEL. HTIL then entered into talks with IDFC to buy this stake. On August 16, 2006, the Hindujas sold a part of their stake to SMMS, the investment vehicle of IDFC.
While HEL has seen stakes change many hands in the past year-and-a-half, the biggest has been the purchase of 67% controlling share by Britain’s Vodafone last month. The Newbury, England-based giant has paid $10.08 billion for the stake.
In March 2006, HEL MD Asim Ghosh and Max India Chairman Analjit Singh had bought stake in the company. They jointly hold 12.26%. Combined with IDFC, the stake stands at 15.03%. The Ruias of the Essar group have also increased their stake from around 20% to a little over 33% in the past two years. This makes the total Indian shareholding in HEL at over 48%.
Source : Economic Times