BPCL Bid Closes as Reliance, Other Major Companies Stay Away

Sources told PTI that 3-4 bids were received for the strategic sale.

Updated
India
2 min read
Bharat Petroleum Corporation (BPCL)
i

The government of India, on Monday, 16 November, got "multiple bids" for buying out its stake in India's biggest fuel retailer the Bharat Petroleum Corporation Limited (BPCL).

This even as billionaire Mukesh Ambani's Reliance Industries, which was an expected bidder, as well as super-major companies like Saudi Aramco, BP and Total stayed away from the bidding process.

Tuhin Kanta Pandey, who is secretary of the Department of Investment and Public Asset Management (DIPAM), that is handling the strategic sale, tweeted that there were "multiple expressions of interest" received by the Transaction Advisor (TA).

"The Transaction will move to the second stage after scrutiny by TA", said the tweet.

Finance Minister Nirmala Sitharaman tweeted about the bidding process as well.

"Strategic disinvestment of BPCL progresses: Now moves to the second stage after multiple expressions of interest have been received,” she said.

While the exact number of bidders was not divulged by the government, industry sources told PTI that 3-4 companies had made a bid.

WHAT ARE WE EVEN TALKING ABOUT?

The government of India has put its approximately 52.98 percent stake at the BPCL, (India's biggest fuel retailer, as mentioned earlier) on the market for a strategic sale. The Indian government proposes to disinvest its entire shareholding in BPCL, comprising 1,14,91,83,592 equity shares held through the Ministry of Petroleum and Natural Gas, which constitutes 52.98 per cent of BPCL's equity share capital. It also plans to transfer control of management to the strategic buyer.

The government had asked for an Expression of Interest (EoI) from bidders for the privatisation move which ended on Monday after four extensions of the deadline for the submission of bids.

SO HOW MUCH IS BUYING THE GOVT'S SHARES IN BPCL GOING TO COST?

The government's stake in the BPCL is worth around Rs 47,000 crore, at its current share price. Apart from this, to buy a further 26 percent stake, one would have to pay an additional ₹23,276 crores and get an open offer.

WHO WERE THE POSSIBLE BIDDERS IN THIS SCENARIO?

According to an earlier research note by Emkay Global, as per responses from DIPAM, interested parties could include global players with limited knowledge on Indian corporate/PSU/accounting/takeover rules as well as parties seeking higher level of clarifications.

The report had said that Ambani's Reliance Industries Limited (RIL) can be a serious contender being mostly net debt free now and could also possibly include UK-based BP as a partner. Other players were Saudi Aramco, and French company Total, none of whom have placed a bid. These companies, some of the topmost in the industry, had stated earlier that at a time when the world is moving beyond liquid fuel, a company like BPCL did not interest them.

That apart, ADNOC, Rosneft and ExxonMobil were also possible contenders.

WHY IS THE GOVERNMENT DOING THIS?

By this process the government gets closer to realising its disinvestment target as stated in the Union 2020-21 budget. The target was set at 2.1 lakh crore. The company that buys BPCL will hold a 15.33 percent stake in the oil refining market and 22 percent stake in the fuel market.

(With inputs from IANS and PTI)

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