India’s Vavasi group and Malaysia’s Al Bukhary group are set to commence due diligence of the Kuwait-based KSC, which functions under the ‘Zain’ brand, this week. The board of KSC — a $7.5 billion (Rs 36,000 crore) in revenues mobile telecommunications company — held a meeting on Sunday on granting the Vavasi-Bukhari combine access to its data room.
The two government-owned companies, Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL), will join the combine later. They will appoint an independent agency for due diligence and valuation of the company.
Data rooms are secured monitored rooms with a large amount of confidential data that is made available during any due diligence process.
“Yes, we have in-principle agreed to participate in the proposal subject to conditions such as government approvals,” MTNL director (technical) Kuldeep Singh told Hindustan Times. “We will do our own independent valuation and due diligence.”
Since time is short, the Vavasi-Bukhary combine is going ahead and appointing an independent bank to conduct valuation.
“However, we may take some time to appoint an agency,” said a BSNL official who did not wish to be identified. The independent agency would also revalidate the valuations done by Vavasi and Al Bukhary group.
Farid Arifuddin, Vavasi's managing director could not be contacted.
BSNL chairman and managing director Kuldeep Goyal was in Geneva and could not be contacted.
According to sources close to the development, officials of Kharafi group — the largest shareholder of KSC — visited and held meetings with the top brass of MTNL and BSNL last week. The two PSUs clarified that they would participate in the process only if they are satisfied with the valuations.
Kharafi group is looking at a valuation of 2 dinars (Rs 334) a share for KSC, valuing its 46 per cent stake at about $13.7 billion or Rs 65,700 crore. However, Vavasi and Al Bukhary group have arrived at their own price.
On September 8, a consortium of Vavasi and Al Bukhary (a Malaysian group with diversified interests), entered into an agreement with Kharafi family, to buy about 46 per cent stake in KSC with management control. The agreement will be signed late evening on Sunday. Kharafi Family owns over 32 per cent of the outstanding shares in KSC. It will organise the rest “from the market”.