IPCL bidders to begin due diligence process tomorrow

Ravi Kapoor

New Delhi, Jan 1: The bidders for Indian Petrochemicals Corporation Ltd (IPCL) will start the process of due diligence on Thursday.

The government is privatising IPCL by selling 26 per cent of its equity in the petrochemicals giant to a strategic partner. For the takeover of IPCL, three companies are in the race — Reliance, Indian Oil Corporation (IOC) and the Nirma group.

According to official sources, the bidders have signed the confidentiality undertaking. They have also been given the drafts of the shareholders’ agreement and the share purchase agreement. These transaction documents will be finalised by taking into account the comments of the bidders.

Due diligence will start this week with handing over information memoranda to the bidders and making the data room accessible to them, said sources. This is not likely to take as much time as it usually takes because two of the bidders — Reliance and IOC — had completed this process in 2000 when IPCL was being sold via another route of privatisation.

IOC, in consortium with the Soros-Chatterjee group, and Reliance were in the last lap of IPCL privatisation when that selloff route was abandoned in November 2000.

The Nirma group is the only new entrant. Officials consider all the three bidders as “serious,” as Nirma is also said to be a significant player in the petrochemicals sector, apart from the giants IOC and Reliance.

UBS Warburg have been appointed by the government as global advisers for the privatisation of IPCL privatisation. Officials are bullish that IPCL privatisation and hope that it takes place in this fiscal. They expected the finalisation of transaction documents by month-end. This would be followed by a meeting of the Cabinet committee on disinvestment (CCD) to call financial bids.

It may be recalled that in November 2001, the CCD had stipulated that IPCL be sold off within 90 days. The disinvestment ministry is satisfied with the pace of privatisation which, it says, is going on as per the plan.