Essar for sale in UK IPO?

A substantial part of the Ruia's family stake in Essar Shipping may be up for sale according to reports in India.

The diversified Essar group is said to be looking at raising up to $2bn against the shipping business to augment a London stock market listing that could bring in another $8bn.

Shashi and Ravi Ruia with a fortune put at over $13.5bn head India's fifth wealthiest family.

Essar requires as much as $10bn of funding to finance power station, refinery and gas projects.

But it also has a major ship newbuilding programme that will add almost a million tonnes of extra capacity to its 25 vessel 1.4m dwt fleet.

The target is to add six 105,000-dwt and six 64,000-dwt bulkers to the fleet by 2012 while retaining the strategy of all tonnage being committed to long term charters.

The vessels are already on order from STX Dalian and ABG in India respectively.

Essar Shipping finance chief, V Ashok, tells TradeWinds that while there are growth plans no comments are currently being made on media reports about fund raising.

Ashok confirms that the Essar group currently owns 83.7% of Essar Shipping.

Divesting part of this “promoters” stake appears to be the option under consideration.

Essar Shipping & Logistics is one of seven business units of Essar Global and in addition to its fleet operates dry bulk and tanker terminals at Hazira, Salaya, Paradeep and Vadinar as well as the offshore sector through Essar Oilfields Services.

Expanding the port facilities alone is expected to require an investment of $1.8bn by 2013.

The London stock exchange float planned by Essar would involve its energy operation and be one of the biggest ever by an Indian group.

The Essar business empire, controlled by billionaire brothers Shashi and Ravi Ruia, is said to have appointed JPMorgan and Deutsche Bank to advise on the fund raising.

Printable version Newsletter sign up