The Hindu Business Line : Hinduja TMT buys Sumitomo stake in Hutch-Essar

Consolidation mode
Consolidation of its stake in Hutch-Essar would give Hinduja TMT greater capability to negotiate on price with whoever is ready to buy the stake.

Mumbai , March 13

The equity churn in wireless operator Hutchison Essar continues, with Hinduja TMT increasing its effective stake in the company from 3.45 per cent to 4.68 per cent by buying out Sumitomo Corp of Japan.

This is the result of HTMT entering into a share purchase agreement with Pacific Horizon Ltd, a subsidiary of Sumitomo, for the purchase of an effective 1.23 per cent stake in Hutchison Essar (Hutch-Essar).

HTMT officials refused to divulge details on the consideration paid for this stake, saying they were limited by a non-disclosure agreement with the seller.

HTMT had no proactive intention to increase its stake in Hutch-Essar; but when Sumitomo decided to offload its stake, HTMT bought it, having the first right of refusal in such an event, said Mr Yagnesh Sanghrajka, Global Chief Financial Officer, HTMT.

However, consolidation of its stake in Hutch-Essar would give HTMT greater capability to negotiate on price with whoever is ready to buy the stake, he said. HTMT has already been approached by several investors, both financial and strategic, said Mr Sanghrajka. HTMT's agreement is for the purchase of Sumitomo's 100 per cent stake in Pacific Horizon, which holds 24.12 per cent of IndusInd Telecom Network Ltd (ITNL). Fifty per cent stake in Pacific Horizon will be purchased upfront and the remaining 50 per cent later, said a company statement.

With this acquisition, HTMT, together with its wholly owned subsidiary InNetwork Entertainment Ltd, will hold 91.54 per cent of ITNL, which currently holds a 5.11-per cent stake in Hutch Essar. ITNL itself is a joint venture of the Hindujas and Sumitomo. This brings HTMT's effective stake in Hutch-Essar to 4.68 per cent.

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