The acquisition of the government’s stake in Hindustan Petroleum Corporation
(HPCL) by state-run Oil and Natural Gas Corporation (ONGC) is likely to happen by December.
is likely to sell its stake in Indian Oil Corporation
(IOC) and Gail
(India) to fund the acquisition. Addressing the media after the company’s annual general meeting, ONGC
Chairman and Managing Director D K Sarraf said, “The acquisition is likely to happen by December. We are looking at various options for funding the deal, including borrowing and also selling off IOC
Shareholders on Wednesday gave nod to the company to borrow up to Rs 25,000 crore. ONGC
holds 13.77 per cent stake in IOC
and 4.87 per cent in Gail.
Sarraf added the company would like to acquire the stake at market price without paying any premium.
The Department of Investment and Public Asset Management (Dipam) would finalise the timing of the deal soon. Dipam had recently invited an asset valuer and transaction adviser, while ONGC
has appointed Citi Bank
and SBI Caps
as consultants for the deal.
It was on July 19 that the Union Cabinet had given in-principle nod to sell a 51.11 per cent government holding in HPCL to ONGC, as an effort to form a global energy giant announced by Finance Minister Arun Jaitley in his Budget speech.
“The route of funding is yet to be finalised. It may be either a mix of borrowing and stake sale or may even be stand-alone. We are also in discussion with Dipam regarding the timeline and valuation,” Sarraf added.
On the possibility of an integration of HPCL and MRPL (Mangalore Refinery and Petrochemicals Ltd) after the acquisition, he said, “It is a decision that the management of both the companies
have to take. But as a parent company, we would support that.”