THE London Stock Exchange’s biggest flotation in four years should be a cause for celebration in the City.
The fact that the flotation is that of an Indian group that might have otherwise chosen Hong Kong or New York or anywhere else in the world to list its oil, gas and energy division, should make it a doubly sweet happening for London.
And yet there are concerns that the imminent flotation of Essar Energy, a subsidiary of the Essar Group conglomerate, is not progressing too smoothly.
Investor concerns focus on the extent to which the London subsidiary, which will be around 75 per cent owned by its Indian parent, will be truly independent from control from Bombay.
Leading the flotation will be Ravi Ruia, who part controls Essar and whose family has invested $2.9bn in the group and there will be two other Essar men, including nephew Prashant, on the London group’s board.
True, there are four independent directors, but of these two are considered to be weak because most of their business experience is in the tiny island of Mauritius.
Those institutions considering taking up stock in the listing will be seeking reassurances that their interests, as minority shareholders in the company, will be protected in the event of any conflict with the main group. They might feel they would be better served by an independent chairman.
The appointment of a fifth independent director will make a difference, but more may be required.