Investor support grows for Vodafone's $20bn Indian bid

Hutchison Essar seen as vital to growth

Vodafone is growing more confident that it can secure the support from its shareholders for a $20bn (£10.4bn) knockout bid for Hutchison Essar, the Indian mobile phone operator.

Vodafone faces stiff competition to secure the takeover from Reliance, another Indian mobile group, as well as from the billionaire Hinduja brothers.

Essar, which already owns a 33 per cent stake in Hutchison Essar, is also expected to bid.

Reliance has bid backing from Apax, KKR, Carlyle and Blackstone, the private equity groups, it was reported yesterday.

However, Vodafone believes that institutional investors recognise that the takeover of Hutchison Essar would substantially bolster the group's long-term growth prospects for years to come.

Several fund managers are concerned that Vodafone will overpay for Hutchison Essar.

One said: "There seems to be broad support for a Vodafone bid, even if it looks on the expensive side, but there is a level beyond which investors will not like to see Vodafone go."

Vodafone has told investors that it will not pursue acquisitions that do not meet its investment criteria.