Vavasi and al-Bukhary to acquire Zain

The prospective new owners of Zain remain in the process of assembling a consortium of investors to fund the takeover.

The prospective new owners of Zain, the mobile operator that is Kuwait's largest public company, remain in the process of assembling a consortium of investors to fund the takeover, and the 46 per cent stake to be purchased is still being assembled by Kuwait's Kharafi Group, a lead partner in the deal said today. After months of speculation, it has been confirmed that India's Vavasi Group will team up with the Malaysian billionaire Syed al-Bukhary in purchasing a controlling stake in Zain, but will add new investors to the consortium in the coming months, said Vavasi's chief executive Farid Arifuddin.

"We have already shortlisted a couple of companies whose aspirations converge with our own," Mr Arifuddin said, referring to the Indian telecommunications companies Bharat Sanchar Nigam and Mahanagar Telephone Nigam. Investors from the Gulf could also join the consortium, he added, without naming specific funds or individuals. "We do have relationships, good friendships with some of the leading funds in the Gulf, and I wouldn't rule it out, but this is all still a process."

Talks between Vavasi and Kharafi regarding the transaction have been going for "almost a year", Mr Arifuddin said, and the widely-discussed price of 2 Kuwaiti dinars per share - amounting to a US$13.7 billion deal - has not been finalised. Until recently, Kharafi was publicly known to hold about 10 per cent of Zain, making the group its second-largest shareholder after the Kuwait Investment Authority, a sovereign fund. But Kharafi and its associates have amassed a much larger stake in recent months.

On Monday, Kharafi told the market that a subsidiary, Al Khair National, was in the process of selling 46 per cent of Zain to a foreign investor. "I presume that a good amount of this stake is already under their control," Mr Arifuddin said, adding that the company would continue amassing the shares under its control to reach the 46 per cent level in the coming months. Bard al Kharafi, the Kharafi Group's vice president, expressed confidence that the company would be able to assemble the required number of shares. "Al Khair group signed to provide 46 per cent and God willing we are able to get this percentage," he told a news conference last night.