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India's Essar agrees to sell oil arm to Rosneft-led group

Reuters  |  GOA, India 

By Douglas Busvine and Denis Pinchuk

GOA, (Reuters) - India's debt-laden Essar Group confirmed on Saturday that it has agreed to sell a 98 percent interest in its unit to a consortium led by Russia's Rosneft, giving the energy giant a gateway into the world's fastest growing fuel market.

The will see Rosneft, along with its partners Trafigura and United Capital Partners (UCP), pay $10.9 billion for Essar's refining and retail assets. Separately, $2 billion will be paid toward the acquisition of the Vadinar port in the western state of Gujarat, along with certain import and export facilities.

Sources familiar with the matter had told Reuters on Friday that a was imminent.

It will give a 49 percent stake in Essar Oil, with 49 percent being split equally between Trafigura and UCP. The was carefully structured to avoid falling foul of western sanctions against over its role in the Ukraine crisis.

"will not get a controlling stake, partly because of these reasons (sanctions)", Andrey Kostin, head of Russian lender VTB which advised Essar on the deal, told Reuters.

The helps to deepen economic ties with that stretch back to the Soviet era. The purchase is the biggest foreign acquisition ever in and Russia's largest outbound deal, according to Thomson Reuters data.

It was finalised after Indian Prime Minister Narendra Modi and Russian President Vladimir Putin met at a summit in the western state of on Saturday.

The all-cash will give and its partners control of Essar's 20 million tonne refinery in Gujarat, and its retail fuel outlets in India, where growth for refined petroleum goods in the next five years is expected to be in the 5 percent to 7 percent range.

"is entering one of the most promising and fast-growing world markets," said its Chief Executive Igor Sechin in a statement, adding that the gives it "unique opportunities for synergies" with its existing assets.

Separately, said it would use Venezuelan crude to supply the Vadinar refinery.

The closing of the transaction is conditional on receiving requisite regulatory approvals that are expected before the end of the first quarter of 2017.

The also reduces some of the pressure on Essar, which is controlled by the billionaire Ruia brothers. The group has a presence in oil and gas, steel, ports and power, and has been under pressure from its lenders to reduce its debt burden.

In parallel with the deal, Russian lender VTB said on Saturday it would lend Essar about $3.9 billion toward debt reconstruction.

Chanda Kochhar, chief executive of ICICI Bank Ltd - one of Essar's top lenders - welcomed the deal, noting that it has been working closely with Essar to deleverage its stressed balance sheet.

(Writing by Euan Rocha and Jack Stubbs; Editing by Clarence Fernandez and Andrew Bolton)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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India's Essar agrees to sell oil arm to Rosneft-led group

GOA, India (Reuters) - India's debt-laden Essar Group confirmed on Saturday that it has agreed to sell a 98 percent interest in its Essar Oil unit to a consortium led by Russia's Rosneft, giving the energy giant a gateway into the world's fastest growing fuel market.

By Douglas Busvine and Denis Pinchuk

GOA, (Reuters) - India's debt-laden Essar Group confirmed on Saturday that it has agreed to sell a 98 percent interest in its unit to a consortium led by Russia's Rosneft, giving the energy giant a gateway into the world's fastest growing fuel market.

The will see Rosneft, along with its partners Trafigura and United Capital Partners (UCP), pay $10.9 billion for Essar's refining and retail assets. Separately, $2 billion will be paid toward the acquisition of the Vadinar port in the western state of Gujarat, along with certain import and export facilities.

Sources familiar with the matter had told Reuters on Friday that a was imminent.

It will give a 49 percent stake in Essar Oil, with 49 percent being split equally between Trafigura and UCP. The was carefully structured to avoid falling foul of western sanctions against over its role in the Ukraine crisis.

"will not get a controlling stake, partly because of these reasons (sanctions)", Andrey Kostin, head of Russian lender VTB which advised Essar on the deal, told Reuters.

The helps to deepen economic ties with that stretch back to the Soviet era. The purchase is the biggest foreign acquisition ever in and Russia's largest outbound deal, according to Thomson Reuters data.

It was finalised after Indian Prime Minister Narendra Modi and Russian President Vladimir Putin met at a summit in the western state of on Saturday.

The all-cash will give and its partners control of Essar's 20 million tonne refinery in Gujarat, and its retail fuel outlets in India, where growth for refined petroleum goods in the next five years is expected to be in the 5 percent to 7 percent range.

"is entering one of the most promising and fast-growing world markets," said its Chief Executive Igor Sechin in a statement, adding that the gives it "unique opportunities for synergies" with its existing assets.

Separately, said it would use Venezuelan crude to supply the Vadinar refinery.

The closing of the transaction is conditional on receiving requisite regulatory approvals that are expected before the end of the first quarter of 2017.

The also reduces some of the pressure on Essar, which is controlled by the billionaire Ruia brothers. The group has a presence in oil and gas, steel, ports and power, and has been under pressure from its lenders to reduce its debt burden.

In parallel with the deal, Russian lender VTB said on Saturday it would lend Essar about $3.9 billion toward debt reconstruction.

Chanda Kochhar, chief executive of ICICI Bank Ltd - one of Essar's top lenders - welcomed the deal, noting that it has been working closely with Essar to deleverage its stressed balance sheet.

(Writing by Euan Rocha and Jack Stubbs; Editing by Clarence Fernandez and Andrew Bolton)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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Business Standard
177 22

India's Essar agrees to sell oil arm to Rosneft-led group

By Douglas Busvine and Denis Pinchuk

GOA, (Reuters) - India's debt-laden Essar Group confirmed on Saturday that it has agreed to sell a 98 percent interest in its unit to a consortium led by Russia's Rosneft, giving the energy giant a gateway into the world's fastest growing fuel market.

The will see Rosneft, along with its partners Trafigura and United Capital Partners (UCP), pay $10.9 billion for Essar's refining and retail assets. Separately, $2 billion will be paid toward the acquisition of the Vadinar port in the western state of Gujarat, along with certain import and export facilities.

Sources familiar with the matter had told Reuters on Friday that a was imminent.

It will give a 49 percent stake in Essar Oil, with 49 percent being split equally between Trafigura and UCP. The was carefully structured to avoid falling foul of western sanctions against over its role in the Ukraine crisis.

"will not get a controlling stake, partly because of these reasons (sanctions)", Andrey Kostin, head of Russian lender VTB which advised Essar on the deal, told Reuters.

The helps to deepen economic ties with that stretch back to the Soviet era. The purchase is the biggest foreign acquisition ever in and Russia's largest outbound deal, according to Thomson Reuters data.

It was finalised after Indian Prime Minister Narendra Modi and Russian President Vladimir Putin met at a summit in the western state of on Saturday.

The all-cash will give and its partners control of Essar's 20 million tonne refinery in Gujarat, and its retail fuel outlets in India, where growth for refined petroleum goods in the next five years is expected to be in the 5 percent to 7 percent range.

"is entering one of the most promising and fast-growing world markets," said its Chief Executive Igor Sechin in a statement, adding that the gives it "unique opportunities for synergies" with its existing assets.

Separately, said it would use Venezuelan crude to supply the Vadinar refinery.

The closing of the transaction is conditional on receiving requisite regulatory approvals that are expected before the end of the first quarter of 2017.

The also reduces some of the pressure on Essar, which is controlled by the billionaire Ruia brothers. The group has a presence in oil and gas, steel, ports and power, and has been under pressure from its lenders to reduce its debt burden.

In parallel with the deal, Russian lender VTB said on Saturday it would lend Essar about $3.9 billion toward debt reconstruction.

Chanda Kochhar, chief executive of ICICI Bank Ltd - one of Essar's top lenders - welcomed the deal, noting that it has been working closely with Essar to deleverage its stressed balance sheet.

(Writing by Euan Rocha and Jack Stubbs; Editing by Clarence Fernandez and Andrew Bolton)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
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