The story of Indian privatization had a rocky beginning. On May 3 1994, after enthusiastic roadshows selling shares in Indian telecoms company Videsh Sanchar Nigam (VSNL) were completed, investment bankers and company officials gathered in London to fill up their order books. "It was the most exciting story to come from India," remembers an investment banker who was present. "A telecom company with a monopoly over international telephony till the year 2004 was a sure shot." But, to his shock, the sale was abruptly withdrawn and the enthusiasm dissolved amid recriminations.
Global bookrunners Kleinwort Benson and Salomon Brothers had won a fiercely contested mandate to arrange the deal in January of that year. But by May market conditions had deteriorated and it became clear that the shares would only sell for Rs1,150, much lower than the price originally agreed. The then telecoms minister, Sukh Ram, was unwilling to agree the sale at this price and the deal was pulled. VSNL would have been India's first state-owned company to float on the international capital markets.
For weeks afterwards allegations were flung at Kleinwort Benson and Salomon Brothers. Rivals accused them of having overbid for the mandate.