Independents’ day

21 February 2014 By Quentin Webb

The investment bank led the troubled Indian group’s London IPO, and remains a house broker. So it’s far from ideal that JPMorgan is now advising independent directors on a potential buyout by the majority owners. Board members urgently need a fresh outside perspective.

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India’s billionaire Ruia brothers are considering buying out minority investors in Essar Energy in a deal that would value the London-listed oil and gas firm at about 900 million pounds ($1.5 billion).

The Ruias’ vehicle, Essar Global Fund, owns about 78 percent of Essar Energy. The possible offer would be made at 70 pence a share. That is a 17 percent premium to the closing share price on Feb. 13, the last day before news of a potential deal leaked. Essar Global Fund would also buy $550 million of convertible bonds at 80 cents on the dollar.

The company listed at 420 pence a share in May 2010, raising 1.3 billion pounds in London’s biggest-ever Indian IPO.

David Cumming at Standard Life Investments, an Essar Energy shareholder, condemned the buyout as “cynical opportunism” attempting to capitalise on a “technically depressed” share price.

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