Zain sale details remain murky

The three major investors announced as partners in the acquisition of Zain have yet to publicly commit to the proposed transaction.

The three investors announced as participants in a deal to take over Zain have yet to publicly commit to the proposed transaction.

The three major investors announced as partners in the acquisition of Zain, the Arab world's second-largest telecommunications company, have yet to publicly commit to the proposed transaction. Almost three weeks after their participation in the US$13.7 billion (Dh50.32bn) deal was announced at a press conference, neither the two Indian state-owned telecoms nor the Malaysian billionaire announced as investors have confirmed their involvement. on Thursday, Kuldeep Goyal, the chairman of BSNL, the larger of the two Indian companies, told reporters he was cautious about the deal and the leader of the buying consortium, India's Vavasi Group. "We are not averse to the deal, but there is some caution through Vavasi," he said. "It is a huge deal. So we have to see what is there in the consortium, what can be done." Analysts have questioned the feasibility of such a large deal being led by Vavasi, a low-profile company with no publicly announced source of funding and little experience in the global telecoms industry. The consortium of buyers was announced by Farid Arifuddin, Vavasi's managing director. Both BSNL and MTNL, another Indian state-owned telecoms, were announced as members, alongside Syed al Bukhary, the billionaire. But both Indian companies have since denied being part of the consortium, saying only that they were considering offers to participate. Mr al Bukhary and his advisers have yet to publicly comment on the deal, and Mr Arifuddin declined to discuss the acquisition when contacted by phone on Thursday. Shares in Zain have slid more than 18 per cent since the acquisition was announced, falling last Thursday to a 38 per cent discount on the proposed price of 2 Kuwaiti dinars (Dh25.51) a share. The Kuwait stock exchange is closed this week for the Eid holidays. Analysts said the falling share price was initially caused by smaller investors selling their shares under the belief that they would not be able to participate in the sale, which is being led by Kuwait's Kharafi Group, Zain's second-largest shareholder. When Wataniya, another Kuwaiti mobile operator, was acquired in 2007, an institutional shareholder quietly gathered a majority stake in the company and sold it to Qatar's Qtel. Shareholders not invited to participate in the selling consortium could not get the premium price of those who were. But Kharafi put similar concerns to rest last week, inviting Zain's almost 20,000 smaller shareholders to participate in the sale. All those owning less than 300,000 shares in the company, valued at 372,000 dinars at current prices, were invited by Kharafi, which said the criteria covered 97.8 per cent of Zain's investors. Kharafi's publicly declared stake in Zain is just above 10 per cent, but the firm is believed by analysts to control up to 25 per cent through its subsidiaries and associates. Zain's largest shareholder, the Kuwait Investment Authority, owns about 25 per cent. It is not taking part in the sale, Zain's investor relations department has told analysts. Zain's management has yet to publicly acknowledge or comment on the sale, and has made no statements on the process to the stock market or media. [e-mail]