The Reliance-Anil Dhirubhai Ambani Group has approached the Ruias through merchant bankers to buy their 33 per cent stake in Hutchison Essar Ltd.
Nimesh Kampani of JM Morgan Stanley, who represents the Ruias, is believed to have had meetings with R-ADAG Chairman Anil Ambani on the issue.
Merchant banking source s said the Ruias were veering to the view of cashing out but a final decision would be taken only after the valuation was decided. Both Reliance and the Ruias refused to comment on the issue. A Hutchison spokesperson from Hong Kong said they did not comment on speculation.
Sources said Ambani had approached Morgan Stanley and Hutchison's adviser Goldman Sachs with a clear direction that he would pick up 100 per cent stake in the company and was not interested in negotiating separately with the Ruias later.
"If the deal happens, it has to be 100 per cent and the Ruias and Hutchison both have to be out. There is no question of having negotiations later on with the Ruias after buying Hutchison," said a source.
At an enterprise value of $12-14 billion, the Ruias' 33 per cent stake is already worth an attractive $4-5 billion. Sources said the Mittals of Bharti had also informally sounded out the Ruias, though Sunil Mittal said nothing was happening at the moment.
Hutchison's advisers are believed to have also sounded out the Tatas but they declined to enter the race.
Sources close to the Ruias said the group had been averse to taking too much debt on its books to buy out its partner's 67 per cent stake, which could cost around $8 billion, especially at a time when the company had restructured and cleaned up its large steel and oil debts.
"With valuations at a peak in the telecommunications business, it is a windfall for the Ruias," said an analyst closely watching the deal. However, they have been approached by some bankers and telecom companies in case they are interested in bidding for the Hutchison stake.
Ambani is expected to close in on a deal in the next few days at an enterprise value of $12-14 billion. His adviser UBS has already roped in buyout funds like Blackstone, Texas Pacific, Carlyle and Kohlberg Kravis Roberts, among others, to structure the financing. With about $10 billion through cash to buy equity and around $2-4 billion as debt, Ambani has enough resources to strike the deal.
However he may face competition from Malaysian telecommunications company Maxis, which may also put in an offer.