Essar group likely to dilute stake in Kenya venture

Diversified business conglomerate Essar group is likely to dilute its stake in Econet , its telecom venture in Kenya, to finance expansion in the country. According to sources, Essar is looking at inducting a private equity firm as a strategic partner. The proceeds of the stake sale would be used by the company to expand its networks in Kenya. When contacted, the Essar spokesperson declined to comment on the issue. Essar Communications Holdings (ECHL), the telecom subsidiary of the Essar Global, owns 49 per cent of Econet Wireless International, which in turn holds 70 per cent of Econet Wireless Kenya. Earlier, South African telecom major MTN Group had reported to have shown interest to acquire stake in mobile phone service provider Econet Wireless Kenya, in which Indian entity Essar Communications Holdings has management rights.
However, the company had denied reports of MTN planning to buy Econet.
Econet Wireless International is a diversified telecommunications group with operations in nine countries in Africa, Europe and the East Asia Pacific, offering products and services in mobile and fixed telephony services, the internet and satellite.

Essar phone arm goes shopping with $75 mn

The Essar group’s mobile retail arm, The Mobile Store, plans to raise $75 million (approximately Rs 375 crore) to fund its acquisition plans, among other things, in India. Speaking to Business Standard, CEO Rajiv Agarwal said, “We are talking to various private equity players to raise funds for our expansion plans, which include acquisitions as well as setting up new stores in the country. Though we are not in final stages of talks with any player for acquisition, we will be looking at Indian companies.” As another sign of consolidation in the mobile retail space, BK Modi’s Spice Group fully acquired the Indian arm of Dubai-based mobile retail player, Cellucom. The deal, which happened last month, is through a share-swap involving Spice acquiring Cellucom’s India stake, while Cellucom invested to acquire 26 per cent in Spice’s mobile retail arm, HotSpot. Spice Corp will now invest Rs 100 crore in the retail arm. While Agarwal did not disclose the stake that would be diluted through Mobile’s proposed expansion, he said the investments would be completed within three months. “It is too premature for us to comment on the stake that we will sell. However, it will definitely be only a minority stake. We are in talks with both foreign and Indian private equity firms.” Agarwal said the company planned to raise the number of mobile retail outlets to 1,800 by 2010 and to take it to 2,500 by the next two years. “India is a very large market and the mobile retail market has a large potential given the number of subscribers that are being added in the country every month. We have only about 6 per cent of the total mobile retail market, so we do have scope to expand,” he said. Analysts say $75 million is a huge amount and the company has good opportunity to acquire a company with this much money. “For Essar, making a strategic buy in some regional mobile retailing chain will be a good option to increase its presence in the local regions as mobile retailing has very few national players,” said Purnendu Kumar, associate vice-president, Technopak.
“All mobile retailers are doing well even during the recession because, due to economies of scale, they are able to offer aggressive pricing,” Kumar added. The company is also planning to launch phones under its private label during the year. At present, The Mobile Store has around 1,400 outlets which, apart from mobile phones, sell accessories, mobile connections and recharges and provide services like bill payments and mobile repairs.

India's Essar plans more Philippine investment

PHILIPPINES--India's Essar Group says it plans to pump more investment in the Philippines, following the completion of its US$250 million purchase of business process outsourcing (BPO) company, PeopleSupport.
Anshuman Ruia, Essar's director and founder, told reporters Wednesday the acquisition is just one of the series of investments the company will make in the Philippines.
Nasdaq-listed PeopleSupport maintains one of its biggest sites in Manila, while the Essar Group is one of India's biggest family-owned conglomerates, with interests in mining, power, energy, telecommunications, among others.
Announced in August 2008, its acquisition of PeopleSupport, via Essar's BPO arm Aegis, is one of its first forays in the BPO market.
Although the executive did not specify a timeframe, Ruia said Essar will be looking for further investments in areas where it already has presence. Apart from its investment in BPO, he added, the company will also be approaching government and industrial groups in the Philippines regarding potential investments in these other markets.
The PeopleSupport acquisition, the 11th major acquisition for Essar, is part of the Indian company's efforts to expand abroad, particularly in emerging countries such as the Philippines and some nations in Africa, he noted.
Specifically, Ruia cited the Philippines' power, telecom and construction sectors, as possible investment sites for Essar, which is currently worth some US$20 billion. He added that it has "the resources, the intention and the access" to make significant investments in the country.
BPO integration complete Meanwhile, company executives said Aegis has completed integration work for the PeopleSupport merger.
Aparup Sengupta, global CEO and managing director of Aegis, said: "We have emotionally, economically and culturally integrated the company in a very short time."
The combine entity clocked approximately US$500 million in revenues last year and has a global headcount of 32,000.
Aegis-PeopleSupport plans to expand its resources in the country, aiming to train some 2,000 potential workers each month. Its Philippine headcount currently stands at 8,000 seats.
Bong Borja, head of Aegis-PeopleSupport in the Philippines, added that the company is planning to acquire real estate properties in key markets in the country, particularly Cebu, which is one of the fastest-growing BPO sites in the Philippines, outside Manila.

IDFC Project Equity invests $68.5m in Indian power production firm

IDFC Project Equity, an Indian infrastructure equity investor, has put INR3.5bn ($68.5m) into Essar Power, a power production company headquartered in Mumbai. The capital will be used for ongoing expansion projects. Essar Power operates three power plants: two in Hazira with generating capacity of 515MW and 500MW each and one in Vadinar with a capacity of 125MW. The company is currently implementing four power projects which are under various stages of construction and are scheduled to be completed over the next three years, after which the total capacity of Essar Power would increase to approximately 6000MW. MK Sinha, president and CEO of IDFC Project Equity, said, "We find the power sector particularly attractive and are delighted to partner with a strong and credible group like Essar for our first large investment in this sector since the initial fund close in June 2008. What we particularly like about this investment is our partner's credible and measured project development and execution plans." Aditya Aggarwal, principal of IDFC Project Equity, added, "We believe that in these unprecedented times, Essar group is well positioned to capitalise on the opportunities in the Indian power sector and leverage its inherent large scale project implementation expertise. The management team at Essar Power is one of the most experienced and proactive in the sector today and we look forward to working with them." IDFC Project Equity manages India Infrastructure Fund (IIF). IIF has been set up as part of the 'India Infrastructure Financing Initiative', a collaborative effort between the government of India and Indian and global financial institutions to deploy $5bn in capital for infrastructure projects in India. IIF currently manages a corpus of $875m.

Essar Oilfield to procure two jack-up rigs for $440 mn

Essar Group company Essar Oilfield Services plans to procure two jack-up rigs for $440 million, a top official of the company said.

"We are in the process of procuring two jack-up rigs at a cost of USD 440 million. These rigs are expected to join our fleet within the next 24 months," Essar Shipping Ports and Logistics Director V Ashok, who is also the CFO of Essar Oilfield Services, told reporters at its KG Basin facility.

The company was also looking at procuring other assets, including offshore drilling assets, which would be in synergy with its expansion plans, Ashok said. EOSL, which is in the process of being brought under the fold of Essar Shipping Ports and Logistics, was planning to expand its fleet to cater to the ever-growing oil exploration and production market, he said. "As the company acquires new assets, it plans to tap the offshore and onshore drilling markets outside India. It is currently looking at various opportunities in the onshore and offshore drilling space in several regions including the Norwegian region, Latin America, West Asia, Africa and Asia," Ashok said.
At present, EOSL has a fleet of 13 land rigs and one semi-submersible rig.

Essar Tele Infra, Quippo likely to merge

Essar Telecom Infrastructure, the country’s second-largest independent telecom tower and infrastructure company, is in talks with the Tata-Quippo tower company for a possible merger, a person familiar with the discussions told ET. Both Quippo Telecom MD Arun Kapur and the Essar group spokesperson declined to comment on the matter. All standalone tower companies in India, except GTL, have less than 6,000 towers each and are exploring merger and buyouts options to take on the large players such as Indus Towers, Bharti Infratel and Reliance Infratel. Moreover, the standalone tower companies have been forced to cut back expansion plans as funding has dried up in the past few months.

American Tower Corp, a global major in the telecom infrastructure space, announced on Tuesday that it will acquire the Mumbai-based Xcel Telecom, which has about 1,700 towers, without disclosing financial details. Indus Towers, a joint venture between Bharti Airtel, Vodafone Essar and Idea Cellular in 16 circles, has about 90,000 towers. Bharti Infratel has just under 30,000 units and Reliance Infratel has about 47,000 towers.

Last year, Essar Telecom Infrastructure was on the ‘verge’ of merging with stand-alone tower company GTL Infrastructure, but the $2 billion deal fell though at the last minute. The two companies went to the extent of finalising the deal structure, which involved GTL Infrastructure buying Essar’s business and merging it with itself, before deciding against going ahead. “Since then, Essar has been looking to merge itself with another entity to bring scale into the business. This is exactly what led to the Tata-Quippo merger,” said an executive at a competing tower firm. In December 2008, Tata Teleservices hived off its tower arm, Wireless Tata Telecom Infrastructure (WTTI), and merged it with Srei group company Quippo Telecom Infrastructure (QTIL). QTIL made an upfront cash payment of Rs 2,400 crore and transferred its 5,000 towers to WTTI in exchange of a 49% stake and management control in the merged entity, which has over 18,000 towers with an enterprise valuation of about Rs 13,000 crore ($2.6 billion).

If the Tata-Quippo deal is taken as a benchmark, every telecom tower in the country should be valued at Rs 78 lakh. Essar Infrastructure has about 4,500 towers and with a conservative value of Rs 50 lakh per tower, its valuations will exceed Rs 2,000 crore. In 2007, Bharti Airtel and Reliance Communications attracted valuations of Rs 1.2-1.6 crore per tower while offloading stakes in their tower arms to buyout groups.

Essar eyes shipping, telecom JVs in Vietnam

Essar Group is looking at shipping, telecom and energy joint venture opportunities in Vietnam, Jagdeesh Mehta, president of Essar Vietnam Steel Corp., said on Thursday at an Indo-Vietnam business conference. Vietnamese Prime Minister Nguyen Tan Dung is leading a business delegation to India. The Essar Group and two Vietnamese companies said earlier this year they would establish a $527-million venture to build a hot-rolled steel mill to help reduce the country's dependence on imports of hot-rolled steel coils.

(Source: Economic Times)

Essar set to acquire Canada-based Algoma

Essar Global has received approval from the Canadian government for acquisition of Algoma Steel for Canadian $1.85 billion (Rs 7,100 crore), as required under the country's foreign- investment rules.

(Source: Business Standard)