Essar investors are bristling at 70p price of sell-off
SHARES in Essar Energy lingered below Essar Global Fund’s takeover price yesterday, as a second minority investor hit out over the plan to take the embattled power firm off the London market.
Essar closed at 68.15p, a rise of more than three per cent but under the 70p that EGF is offering for the 22 per cent of the firm it does not already own.
“We are disappointed. The company came to market almost three years ago. It has failed miserably to achieve any of its plans,” said one institutional investor, who did not wish to be named.
They said they will listen to the proposal but added that they were “not impressed and distinctly underwhelmed” at this stage.
The FTSE 250 firm’s independent board members have hired JP Morgan and Linklaters as external advisers to help them weigh up the proposal.
JP Morgan declined to comment yesterday. Joe Seifert, a former executive director in JP Morgan’s UK natural resources team who worked on the Essar Energy float, left the bank last year to take a senior finance role at Essar Group.
The conglomerate floated Essar Energy in 2010 at 420p a share, but the stock has since been hammered by mining delays and tax disputes.
Standard Life said on Sunday the plan “is an example of cynical opportunism and should not be allowed to proceed”.
Analysts at Deutsche Bank said investors might find the price unattractive but added that “significant operational challenges in the power business, low refining margins and high leverage” could make selling out the better option.