Essar said to plan Vodafone-Essar listing in India or London

The $15-billion diversified Essar Group is said to be planning to float its stake in Vodafone-Essar, India''s second-largest mobile service company, either in India or London.

The Guardian  yesterday reported that Essar group, controlled by brothers Shashi and Ravi Ruia, is understood to have met bankers in London and Mumbai to prepare for a multibillion-dollar flotation of its 33 per cent stake in the mobile phone company.

British mobile carrier Vodafone Group PLC had acquired Hong Kong-based Hutchison Whampoa's 67-per cent stake in Hutch-Essar for $11 billion in February 2007.

Under the exit clause of the agreement signed by Vodafone and Essar on 15 March 2007, Essar will have the right to sell its stake in three years, which began in May this year, to Vodafone for $5 billion subject to Indian government easing the 74-per cent cap on foreign investment in telecommunications, or an option to sell between $1 billion and $5 billion worth of shares of the joint venture company to Vodafone at an independently appraised market value.

But since the policy on foreign company ownership cap in an Indian joint venture has not been changed by the government, Vodafone cannot buy Essar's stake, but Essar could sell it to another Indian company.

However, Shashi Ruia, chairman of Essar Group told the paper that a flotation of its stake in Vodafone-Essar could be one route but stressed "all options are open.''