Essar calls off IPO proposal for Vodafone Essar stake

Reuters reports that Indian conglomerate Essar Group has decided not to proceed with a proposed initial public offering (IPO) of its 33% stake in India’s third-largest cellco by subscribers Vodafone Essar, a joint venture with the UK’s Vodafone Group. Essar has been in talks with up to a dozen banks to explore options, including an IPO, for its stake in the mobile operator, but a source told Reuters that ‘they are not going ahead for now,’ without suggesting reasons for the postponement. TeleGeography’s GlobalComms Database says that Vodafone Group has granted put options to Essar, exercisable until May 2011, that, if exercised, would allow the Indian group to sell its entire 33% shareholding for USD5 billion to the UK company, which would most likely list the shares on the Indian stock market to remain in compliance with a foreign ownership limit of 74%.