In what is seen as one of biggest foreign direct investments into India’s energy sector, Ruias-promoted Essar Group has divested 98% stake for $13 billion (Rs 86,100 crore) in its flagship 20 million tonnes per annum refinery in Gujarat, nearly 2,500 fuel stations and Vadinar Port to a consortium lead by Russia’s national oil company Rosneft along with commodity trading firm Trafigura and private investment group United Capital Partners.
The deal would help Essar to leverage it’s high debt portfolio to the tune of Rs 88,000 crore at the group level. Financial institutions and banks would be benefitted by way of getting back their loans.
The deal has been concluded on the sidelines of the ongoing BRICS summit in Goa, where Indian Prime Minister Narendra Modi and Russian President Vladimir Putin are taking part. New Delhi’s interest in increasing economic cooperation with Kremlin was reflected in several rounds of talks between Modi and Putin.
The $12.9-billion all-cash deal is being framed under two transactions. The first sale and purchase agreement envisages the sale of 49% to Petrol Complex (a subsidiary of Rosneft Oil); the second envisages the sale of the remaining 49% to Kesani Enterprises Company Limited (owned by a consortium led by Trafigura and United Capital Partners) at an enterprise valuation of Rs 72,800 crore ($10.9 bn).
An additional Rs 13,300 crore ($2 billion) will be paid for the acquisition of Vadinar Port, which has world-class storage and import/export facilities.
The closing of the deal is conditional upon receiving requisite regulatory approvals and other customary conditions. The companies expect to obtain the relevant approvals before the end of this year.