The Ruias, promoters of the Essar group, have valued Sterling Computers Ltd, the holding company for all their cellular operations, at Rs 1,312 per share in their proposed $175 million (Rs 630 crore) overseas equity issue. The issue is scheduled to hit the markets before the end of the year.
The company last Saturday obtained the clearance from the Cabinet Committee on Foreign Investment (CCFI) to bring in foreign direct investment up to 49 per cent through either a global depository receipts or an American depository receipts issue, including a private placement.
The $175 million issue, involving offering of 48,00,000 shares, will have a green shoe option of up to 15 per cent. In its application to the government, Sterling Computers has indicated that the funds would be utilised for subscribing to the equity capital of the companys telecom subsidiaries and for corporate restructuring needs.
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The Rs 1,312-per-share valuation of the overseas issue of Sterling Computers is far higher than the Rs 532 per share offered to the Indian public early this year. A company spokesperson attributed the sharp difference in the two prices to the projected growth in the telecom business in the country.
The stake of Essar Investments Ltd in Sterling Computers will go down to nearly 41 per cent after the proposed overseas issue with another over 10 per cent held by different group companies.
Sterling Computers owned almost fully by Essar Investments, the groups holding company owns 51 per cent equity of Sterling Cellular, the Delhi cellular licensee. Sterling Cellular, in turn, owns 80 per cent equity of Aircell Digilink which is the cellular licensee in Uttar Pradesh (east), Haryana and Punjab.
Sterling Cellular has also obtained the CCFI approval at its last meeting to replace its foreign partner Swiss Telecom PTT by Mobilvest (Mauritius), Swiss Telecoms 100 per cent subsidiary.