Govt invites bids for 52.98% stake in BPCL
09 March 2020
The Government of India is proposing a strategic disinvestment of its entire shareholding in Bharat Petroleum Corporation Limited (BPCL) comprising of 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 along with transfer of management control to a strategic buyer.
The sale of stake will, however, not include BPCL’s equity shareholding of 61.65 per cent in Numaligarh Refinery Limited (NRL), and management control thereon, according to a preliminary information memorandum inviting bids issued by the petroleum ministry.
The shareholding of BPCL in NRL will be transferred to a central public sector enterprise operating in the oil and gas sector under MoPNG and accordingly is not part of the proposed transaction, a release issued by transaction advisor Deloitte Touche Tohmatsu India LLP said.
The preliminary information memorandum is intended to assist interested investors in evaluating the company and, accordingly, submit expression of interest (EoI) and does not comprise an offer of shares to the public or an invitation to public to subscribe for shares or any investment advice, the release stated.
Deloitte Touche Tohmatsu India has asked bidders to carry out their own evaluation/ due diligence and analysis of BPCL and all data set forth in the preliminary information memorandum and carry out own investigation in relation to the business of BPCL.
The information contained in the preliminary information memorandum is basic information and may be subject to material updating, revision and further amendments and should not be the basis of any investment decision.
Deloitte also said, neither the GoI nor the company nor DTTILLP or any of its affiliates, subsidiaries, advisors, directors, officers, employees or agents make any representations and/or warranty in respect of the information contained in this PIM and that it does not undertake to update this information to reflect events subsequent to the date of its issue.
Accordingly, neither DIPAM nor DTTILLP or any of its directors, officers, agents, employees or advisers take any responsibility for, or will accept any liability whether direct or indirect, express or implied, contractual, tortuous, statutory or otherwise (including without limitation, negligence), in respect of, the accuracy, completeness, authenticity, correctness and fairness of the information or for any opinion contained in this preliminary information memorandum.
The Cabinet Committee on Economic Affairs (CCEA) had, on 20 November 2019, given its in-principle approval for the strategic disinvestment of the entire GoI holding in BPCL which was 53.29 per cent of the share capital of BPCL as per public disclosure at that time. Subsequently, GoI holding in BPCL has changed to 52.98 per cent as of 31 December 2019 on account of part of GoI’s shareholding having sold through Bharat-22 ETF.
This percentage may increase to 58.43 per cent in case certain shares of BPCL held by BPCL Trust for Investment in Shares are cancelled. However, the number of shares held, and to be sold, by the GoI in the proposed transaction will not change and remain firm at 1,14,91,83,592.
Expressions of interest for the strategic sale of BPCL will be received till 2 May, the Department of Investment and Public Asset Management (DIPAM) said in the bid document.
The bidding will be a two-stage affair, with qualified bidders in the first expression of interest (EoI) phase being asked to make a financial bid in the second round. PSUs "are not eligible to participate" in the privatisation, the offer document said.
Any private company having a net worth of $10 billion is eligible for bidding and consortium of no more than four firms will be allowed to bid, it said.
As per the bidding criteria, the lead member of the consortium must hold 40 per cent stake and others must have a minimum net worth of $1 billion. Changes in the consortium are allowed within 45 days but the lead member cannot be changed, it added.
BPCL will give buyers ready access to 14 percent of India's oil refining capacity and about one-fourth of the fuel market share in the world's fastest-growing energy market.
BPCL has a market capitalisation of about Rs87,388 crore and the government stake at current prices is worth about Rs46,000 crore. The successful bidder will also have to make an open offer to other shareholders for acquiring another 26 per cent at the same price.
Privatisation of BPCL is essential for meeting the record Rs2,10,000 crore target divestment target finance minister Nirmala Sitaraman has set in the Budget for 2020-21.
BPCL operates four refineries in Mumbai (Maharashtra), Kochi (Kerala), Bina (Madhya Pradesh) and Numaligarh (Assam) with a combined capacity of 38.3 million tonnes per annum, which is 15 per cent of India's total refining capacity of 249.4 million tonnes.
The company distributes 21 per cent of petroleum products consumed in the country by volume as of March this year and has more than a fifth of the 250 aviation fuel stations in the country.