Vodafone Plc and the Essar Group have appointed UBS as the third bank to value Vodafone Essar, according to news reports. Prior to this, Vodafone had already appointed Goldman Sachs as its banker and Essar had appointed Standard Chartered Bank.
The appointment is part of an exercise to establish the price at which Essar would sell a part of its stake to Vodafone. Essar holds 33 per cent in Vodafone Essar and has, as part of pre-agreed terms, till May 8, 2011, to decide if it wants to sell a part or the entire stake to Vodafone.
If the Indian partner chooses to sell the entire stake, it would receive $5 billion. However, if it chooses to sell only a part of its stake, Vodafone would have to pay fair market value for those shares.
The two companies had earlier agreed that fair value would be determined by an aggregate value discovered by three investment bankers, one each from both the partners and one neutral banker. It is believed that UBS, which is likely to submit its value for the stake by March 2011, because Essar must indicate its course of action to Vodafone by the end of the financial year.
Standard Chartered and Goldman Sachs have already submitted indicative values for the stake, the bankers said. Goldman Sachs has valued the 33 per cent stake at $3.5-4 billion, while Standard Chartered’s estimates are higher than $5 billion.
