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| HPCL exploration arm to get new half-owner |
| Kalpana Pathak / Mumbai Jul 19, 2010, 00:38 IST |
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To replace ICICI arms, HDFC with an ‘active partner’
ICICI Bank, ICICI Venture Funds and HDFC would soon offload their 50 per cent equity stake in Prize Petroleum Company (PPCL) to another exploration and production company that PPCL is to bring in.
Prize Petroleum is the exploration and production arm of Hindustan Petroleum Corporation (HPCL). Government-controlled HPCL has 50 per cent equity in PPCL, with ICICI Bank and ICICI Venture Funds holding 35 per cent and 10 per cent, respectively. HDFC holds the remaining five per cent.
An email to ICICI Bank and HDFC remained unanswered but M R Pasrija, managing director, PPCL, told Business Standard they needed an active partner. So, they were looking for a company that is into exploration. “We are looking at a turnaround of the company in a big manner. We want an active partner who could also infuse funds for expansion in the exploration and production businesses. Our existing partners would be selling their stakes to the new partner that we would bring in shortly. We should be able to close the discussion within this quarter,” he said.
While declining to name the company with whom negotiations were underway, Pasrija said it was an existing player in the exploration and production business. PPCL was looking for a partner about two years earlier, too, and had been in talks with steel magnate Lakshmi Mittal, Essar Oil, Larsen & Toubro and Jaiprakash Associates for a possible 50 per cent stake sale. The acquisition could not happen at the time.
The fresh round of search for a partner assumes importance since the company is in need of funds to finance its acquisition plans. “We are looking at acquisitions of discovered and producing assets overseas and we would need funds for the same. The Commonwealth of Independent States (CIS) is one of the regions where we would focus,” added Pasrija.
CIS countries include Russia, Armenia, Kyrgyzstan, Turkmenistan, Ukraine and Uzbekistan, among others.
Pasrija plans to finance the acquisitions through debt and equity. Besides buying the stake from the financial institutions, the new partner will be expected to invest Rs 500 crore in PPCL, which would also invest around Rs 500 crore.
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