Kicking off the process for sale of HPCL stake to ONGC, the government has invited bids for appointing merchant bankers and legal consultants for the Rs 28,000-crore deal. The Department of Investment and Public Asset Management (DIPAM) has invited expression of interest from professional consulting firms and investment/merchant bankers for managing the disinvestment process. It is seeking to appoint two advisors for the strategic sale besides one reputed law firm with experience and expertise in mergers and acquisitions or takeovers or strategic disinvestment, to act as legal adviser, according to the notice inviting bids. The Cabinet Committee on Economic Affairs (CCEA) had on July 19 given ‘in-principle’ approval for strategic sale of the government’s existing 51.11 per cent stake in Hindustan Petroleum Corp Ltd (HPCL) to Oil and Natural Gas Corp (ONGC) along with the transfer of management control. The two merchant bankers would assist the government on “modalities of disinvestment and the timing” as well as recommend the need for intermediaries required for the process, the notice said. They would do business valuation of HPCL, structure the transaction, suggest measures to fetch optimum value and assess positioning of the strategic sale, it said. They will also prepare all documents like information memorandum (IM), confidentiality agreement and transaction agreements such as agreement to sale and share purchase agreement.
The legal adviser would review and advise on all legal contracts, titles of properties/assets/real estate, intellectual property rights and contracts with employees. It will also draft transaction related documents and advise on the structure of the transaction including compliance with SEBI guidelines and stock exchange listing norms. Bids have been invited for consultants and legal adviser by August 10, the notice said. An official said the government is keen to complete the transaction within the current fiscal.
HPCL will remain a public sector unit with a separate board and brand identity post ONGC acquiring government’s entire 51.11 per cent stake, which at current prices is valued at over Rs 29,100 crore. Post-merger all refining units of ONGC will be accumulated under HPCL, making it India’s third largest oil refiner after Indian Oil Corp (IOC) and Reliance Industries. For overseeing this transaction, the CCEA approved setting up of an alternative mechanism, headed by the finance minister, which will help in taking quick decision with regard to the timing, price, terms and conditions and other related issues, the official said. Oil Minister Dharmendra Pradhan and Road Transport and Highways Minister Nitin Gadkari are other members of the panel. HPCL currently has 24.8 million tonnes per annum of refining capacity. Mangalore Refinery and Petrochemicals Ltd (MRPL), a subsidiary of ONGC, has 15.1 million tonnes capacity.