The $12.9 bn Transaction To Sell 98% Stake in Essar Oil

The $12.9 bn Transaction To Sell 98% Stake in Essar Oil
The $12.9 bn Transaction To Sell 98% Stake in Essar Oil
·         Largest single tranche of inbound foreign direct investment
·         Transaction pegs Essar Oil’s enterprise value at Rs 72,800 crore ($10.9 billion) plus an additional Rs 13,300 crore ($2 billion) to be paid for Vadinar Port
·         Essar Global Fund decided to monetise Essar Oil, one of its key assets, after Rosneft and many other overseas firms evinced a keen interest in picking up a stake in the company
·         Rosneft, the Russian government owned integrated oil company, has picked up a 49% stake in Essar Oil Limited
·         Consortium of Trafigura and UCP pick up another 49% stake
·         All-cash deal expected to close in Q1 2017, subject to all necessary approvals
·         Essar plans to utilise proceeds from the stake sale to deleverage the Group and pave the way for strategic consolidation and growth in other businesses
·         There is no non-compete fee under the transaction with Rosneft
·         Deal in line with government’s vision to attract high ticket foreign investments into India
·         Transaction includes 20 MTPA refinery at Vadinar (Gujarat) and all supporting infrastructureessar
·         Deal demonstrates the ability of Indian businesses to attract overseas investment and indicates foreign players’ belief in the India growth story
·         Transaction also gives Rosneft and the UCP-Trafigura consortium access to Essar Oil’s pan-India network of over 2,700 fuel retail outlets
·         Deal will help Essar deleverage almost 50% of its Rs 88,000 crore debt and substantially reduce interest costs


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