Reliance, Aramco eye BP's Castrol unit in potential $10 billion deal

BP's Castrol division could fetch $8-10 billion, drawing interest from Reliance, Aramco, and private equity firms in one of the year's biggest energy deals

BP Plc’s Castrol lubricant division has attracted interest from major global players, including India’s Reliance Industries, Saudi Aramco, and private equity firms such as Apollo Global Management and Lone Star Funds, according to a Bloomberg report citing sources familiar with the matter.

 

The potential deal could value the business between $8 billion and $10 billion, making it one of the most significant energy asset sales currently underway.

 

BP has begun circulating initial details of the unit to prospective buyers, which also include global investment firms Brookfield Asset Management and Stonepeak Partners.

 

Saudi Aramco at forefront of potential bids

Energy giant Saudi Aramco is reportedly considering a full or partial acquisition of the Castrol business. Discussions are still in the early stages, but formal bids are expected in the coming weeks. 

 

To help fund the potential deal, banks are preparing debt packages of up to $4 billion, likely made up of leveraged loans and high-yield bonds, offered in both euros and US dollars to attract a broad investor base.

 

Reliance, Aramco drawn by Castrol’s India presence

Castrol’s strong presence in fast-growing markets like India has caught the eye of Reliance and Aramco. Castrol India Ltd, which is publicly traded in Mumbai, is currently valued at around $2.4 billion. Shares of Castrol India were up more than 6 per cent as of 9:45 am on the BSE on May 29. 

 

BP’s strategic reset behind the move

The potential sale of Castrol is part of a broader restructuring effort at BP, which is facing pressure to optimise its portfolio. The strategic review was initiated after activist investor Elliott Investment Management became a significant shareholder and pushed for change.

 

BP’s plans are facing challenges, particularly from declining crude oil prices, which have dampened revenue expectations and may accelerate the need for high-value asset sales. Castrol, which also works on liquid cooling systems for AI data centres, is seen as an attractive asset for buyers with an eye on both traditional energy and emerging tech areas.

 

BP’s share price has declined by nearly 9 per cent year-to-date, placing the company’s market value at about £57.1 billion.