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By Rakesh Sharma and Santanu Choudhury Of DOW JONES NEWSWIRES (Adds comments from Essar, Vodafone executives, background) NEW DELHI (Dow Jones)--The chief executive of Essar Group said Thursday the company is in early talks with Vodafone Group PLC (VOD) about an initial public offering for their joint venture, Vodafone Essar Ltd. A listing would give the mobile phone joint venture much-needed funds to expand in India's highly competitive and fast-growing telecom market and would provide an alternative to Essar selling its stake in the company to Vodafone via a put option. "It's in preliminary discussions," Essar Group Chief Executive Prashant Ruia told reporters Thursday when asked about the potential listing. "We have time until May on our put option. We have all the options--an IPO is one," he said. Vodafone paid $11.2 billion to Hutchison Telecommunications International Ltd. in 2007 for a 67% stake in Hutchison Essar Ltd. Diversified conglomerate Essar holds the remaining 33% stake in the joint venture, which was renamed Vodafone Essar. The deal gave Essar the option to sell its 33% stake for $5 billion by May 2011 or at a market-determined price, whichever was higher. Vodafone has an agreement with Essar that gives it first option to buy out the Indian company's stake if some or all of the holding is put up for sale. "We might exercise," Essar's Ruia said Thursday when asked about the put option. But an IPO looks like a viable option as Essar cannot simply sell its entire stake to Vodafone because current Indian rules prohibit a foreign entity from holding more than 74% in Indian telecommunications companies. "We have a partner (Essar) here. We will discuss together what to do, and we will decide together what to do," Vodafone Group PLC Chief Executive Vittorio Colao told reporters Thursday when asked about listing the joint venture. In the recently concluded spectrum auction, Vodafone Essar spent INR116.18 billion ($2.47 billion) for bandwidth in nine service areas, including Mumbai and Delhi. BP Africa Assets, Shell Refineries Ruia said Essar may consider acquiring BP PLC (BP) assets in Africa, saying such a possibility "is in early process." He said BP is trying to sell assets in five or six African countries, adding "they are inviting proposals for all." A spokeswoman for BP Wednesday said the sale of the company's marketing businesses in Namibia, Malawi, Tanzania, Zambia and Botswana--announced in March 2010--is still in progress. The Press Trust of India, citing industry sources, reported Wednesday that Reliance Industries Ltd. (500325.BY) and Essar Oil Ltd. (500134.BY) were among companies in the race to buy BP's fuel retail assets in some African countries. Reliance Industries and Essar Oil have offered $400 million-$500 million each for BP's assets in countries such as Botswana, Tanzania, Namibia, Malawi and Zambia, PTI said. On purchasing three of Royal Dutch Shell PLC's (RDSA) European refineries, Ruia said "we are still in talks but the talks are no longer exclusive." Shell entered exclusive talks with Essar over the sale of the three refineries--Stanlow in the U.K. and the Heide and Harburg refineries in Germany--late last year, but discussions between the companies have failed to reach a conclusion. Shell's chief financial officer Simon Henry said in April that talks with Essar are still on but the company has also initiated talks with other potential parties, including private equity groups and state-controlled oil companies from outside Europe. -By Rakesh Sharma and Santanu Choudhury, Dow Jones Newswires; +91-11-4356-3305; santanu.choudhury@dowjones.com (R. Jai Krishna and Arpan Mukherjee in New Delhi contributed to this article) (END) Dow Jones Newswires July 29, 2010 08:16 ET (12:16 GMT)