The Ruias have received overwhelming response from international banks for funding of their proposed bid to pick up Hutchison's 67 per cent equity stake in Hutchison-Essar Ltd, in which they hold the remaining stake.
The group has received commitment from a clutch of top bankers, which include Standard Chartered Bank, Lehman Brothers, Calyon Bank, Morgan Stanley, Merrill Lynch, BNP, Credit Suisse, and Citi Bank.
Banking sources say the group, which had approached various banks earlier, is evaluating the firm proposals to choose a consortium of bankers. Once this is done, the Ruias will make a formal bid for the Hutchison stake and start negotiations.
A top merchant banking source said: "The individual commitments of the various bankers that hope to be the major fund source add up to $40 billion. Obviously, this does not mean that the bankers will commit money for a $40-billion deal, as it has to be charged on assets. But it gives them leeway to choose their consortium partners."
When contacted, an Essar spokesperson declined comment.
Meanwhile, Financial Times reported on Wednesday that Hutchison Whampoa had signalled it would only entertain offers well in excess of $14 billion for its stake. It said Hutchison Finance Director Frank Sixt had dismissed an indicative offer of $13.5 billion reportedly made earlier this month by private equity firm Texas Pacific and Malaysian wireless operator Maxis Communications.
Sixt told the newspaper, "A lot of people are interested in having an Indian asset. We have one, which we are very pleased with. And really there has not been anything that rises to the level of being an offer capable of acceptance."
Sources say the Ruias have the first right of refusal as and when Hutch plans to sell its stake. Hence, Hutch is bound to consider Essar's bid before it evaluates other bids.
Further, unlike other bidders that may have to buy 100 per cent stake, Essar has to buy only 67 per cent.
Various international companies, including Vodafone, Maxis, and Orascom have shown keen interest in bidding for Hutch's 67 per cent stake in Hutchison Essar.
India's Reliance Communications is also in the race. The valuation of the company, according to merchant bankers, has already touched the $17-18 billion level.
Hutchison-Essar currently has over 22 million subscribers, enjoying the highest average revenue per user among Indian telecom operators. With a pan-India presence and high subscriber base in the metros, it is a prized buy for any bidder.