India's Reliance Has 4 Private Equity Partners - Source

HONG KONG -(Dow Jones)- India's Reliance Communications, which confirmed recently it is eyeing an acquisition of Hutchison Essar, has received support from four private-equity firms in a bid for the Indian mobile phone operator, a person familiar with the situation said Friday.

The four private-equity companies are Blackstone Group, Apax Partners, Carlyle Group and Kohlberg Kravis Roberts & Co, the person said.

The four are planning to invest between US$1.5 billion and US$2 billion for a 12%-15% stake in the acquired company, if Reliance wins, the person said.

Reliance Communications Chairman Anil Ambani said in late December that the firm had received commitments from banks and private-equity firms for a bid but didn't elaborate.

Friday, the person familiar with Reliance's bid said: "You can't calculate the value of the bid based on the 12%-15% stake because of the high level of bank funding."

The person said Reliance has secured US$12 billion to US$15 billion in bank funding for its bid for the majority stake in Hutchison Essar, India's fourth largest mobile phone operator by subscribers.

Hutchison Essar is 67%-owned by Hutchison Telecommunications International, the emerging markets mobile-phone firm owned by Hong Kong billionaire Li Ka-shing's Hutchison Whampoa, and 33%-owned by India's Essar Group, which is controlled by Ruia family.

Hutchison has said it wouldn't take any bid valuing the Hutchison Essar venture at less than US$14 billion, adding it has received several proposals to buy the Indian business.

HTIL said Friday that Essar has limited refusal rights to bidders for Hutchison's stake in its Indian wireless joint venture with Essar Group.

HTIL said Essar's right of refusal "exists in a limited case of a sale to certain specific Indian telecom operators," a HTIL spokeswoman said.

A person familiar with the matter said, however, that the right is limited to Hutchison Essar's three major Indian rivals, Reliance Communications, Bharti Airtel and Tata Group's Tata Teleservices.

Reliance Communications is India's second-largest mobile phone company by subscribers and Bharti Airtel is the biggest.

Egypt's Orascom Telecom is interested in buying Hutchison's stake, but Malaysia's Maxis Communications is no longer in the running, a person familiar with the Egyptian and Malaysian companies' plans said. Orascom, which bought at 19.3% stake in HTIL in December 2005, couldn't immediately be reached for comment.

As well as Reliance, Essar and Orascom, other firms eyeing Hutchison's stake in the Indian joint venture are the Hinduja Group of India, which disclosed its interest Thursday, and the UK's Vodafone Group.

Vodafone, of Newbury, England, is unable under telecommunications regulations to extend its 10% ownership in India's largest mobile-phone provider, Bharti Airtel, and is looking to offset poor growth in Europe with strong growth in the Indian and African markets.

Hutchison confirmed last week it had dismissed a US$13.5 billion offer made in mid-December for its India stake by Maxis and U.S. private-equity company Texas Pacific Group.

"This isn't a formal auction process," said a person familiar with the bidding process. "It's all very fluid, and it's been a case of people approaching Hutchison with their offers though I don't see an enterprise value of less than US$15 billion for Hutchison Essar getting the go-ahead."

-By Nisha Gopalan, Dow Jones Newswires; 852-2832-2343; nisha.gopalan@dowjones.com

(Ernest Kong contributed to this story.)

(END) Dow Jones Newswires "

Posted to the site on 5th January 2007