Standard Life Investments (SLI) has described the Ruia family as ‘cynical opportunists’ after they mounted a bid to buy back Essar Energy at a massive discount to its listing price.
The family, which owns 78% in the Indian oil refiner, has mounted a 70p per share offer for the outstanding 22% through its investment vehicle Essar Global Fund limited.
The bid is being coordinated by brothers Shashi and Ravi, the joint 12th richest individuals in India with a net worth of $5.5 billion, according to Forbes.
Shares in Essar listed at 420p per share four years ago and shot up to a high of 638p in December 2010, earning it a place in the FTSE 100.
However, they have since crumbled on the back of the slump in Indian economic growth, with licensing of coal block issues and an unexpected tax ruling made by the Supreme Court of India in September 2012 adding to the strain. The firm is also embroiled in ongoing tax disputes regarding retrospective tax legislation.
Shares in Essar closed at 66p on Friday and SLI, one of the biggest external shareholders in Essar has slammed the move.
Head of equities David Cumming said in a statement: ‘Essar Global's potential attempt to buy out the minority shareholder position in Essar Energy, capitalising on a technically depressed share price, is a calculated attempt to deprive minority shareholders of the substantial future upside in Essar Energy's valuation.’
He added: We look to the Essar Energy Board to protect minority interests and not break commitments outlined to investors at the time of the flotation and subsequently. This potential bid is an example of cynical opportunism and should not be allowed to proceed."
According to Reuters, other big shareholders in Essar include Henderson Global Investors, Legal & General Investment Management and Scottish Widows Investment Partnership.