Essar Oil to transfer shares within group

The move is ahead of the Group’s listing plan on LSE

Amidst its listing plans on the London Stock Exchange, the Ruia-led Essar Group today said its promoters would be transferring Essar Oil shares between themselves.

Essar Energy Holdings, which runs the group’s oil assets, and Essar Investments would acquire 18.14 per cent stake of Essar Oil between April 9 and April 30, the company said in a statement to the Bombay Stock Exchange.

Essar Investment would also acquire some shares of Essar Shipping Ports & Logistics, the company said, without giving any details.

“The move has been undertaken for clear ownership structures and no increase in equity would take place,” said a senior Essar Oil official.

Early last month, the Group had said it was exploring the option of a listing on the London Stock Exchange.

“This is a precursor to the Essar Group's plans to de-list some of the group companies,” said S P Tulsian, market analyst.

The Group is looking at the listing of a holding company that will have its refinery, power, exploration and production businesses.

It is also looking to sell 20-25 per cent shares of its energy (oil and power) business, to raise $2.5-3 billion (about Rs 14,000 crore) to part-finance its estimated Rs 40,000-crore investment plans in the next three to four years. The group's energy and power operations are valued at about $12 billion.

The Group has already tied up for funds to raise the power generation capacity from 1,200 Mw to 6,000 Mw. In the second phase, the capacity is sought to be raised to 11,000 Mw, at an investment of about $4.5 billion.

On its energy business, the Group plans to expand refining capacity from 10.5 million tonnes to 18 million tonnes and funds to the tune of $1.6 billion have been tied up. In the next phase, the capacity is sought to be expanded to 34 mt, requiring an additional $4 billion.

Recently, Ravi Ruia, Vice-Chairman of Essar Group, resigned from the boards of Essar Shipping and Essar Oil to focus on growing the group's overseas business. His son, Rewant Ruia, was recently made the head of the group’s North American operations.

Group Chairman Shashi Ruia, and his sons, Prashant and Anshuman, would continue to be based at Mumbai.

Promoters Shashi and Ravi Ruia are ranked fifth among India’s billionaires, with a wealth of $13.6 billion, according to Forbes magazine.

The Group had bought Canada-based Algoma Steel in 2007 and an iron ore mine in Minnesota the next year. Last month, it acquired Trinity Coal, thus locking both the key raw materials needed to make steel. Its business process outsourcing company, Aegis, also has a significant presence in North America.