Mining major, Vedanta Group has submitted an expression of interest (EoI) for buying 52.98 percent government stake in Bharat Petroleum Corporation (BPCL). The spokesperson from Vedanta said, “Vedanta’s EoI for BPCL is to evaluate potential synergies with our existing oil and gas business. The EoI is at a preliminary stage and is exploratory in nature”. A least of three to four players have reportedly submitted EoIs for the privatization process of BPCL. The deadline for submission was Monday, but the government has not officially revealed any names.
Ever since it bought Cairn India in December 2011, Vedanta has been venturing into new business segments. It also branched out into gold mining and acquired the control of Electrosteel Steels under a resolution plan, thereby foraying into the steel sector in 2018.
However, according to a report by Business Standard, industry experts indicate that with the recent failure of the delisting process and the company sitting on a debt-pile of reportedly over Rs. 1.25 trillion, the acquisition of BPCL may not be easy for the metals-to-mining conglomerate.
According to rating agency S&P Global, the failed delisting has narrowed the refinancing options for its parent company Vedanta Resources, raising risks over the company’s ability to sustainably service its debt beyond the next 12 months. Vedanta’s scrip was up 1.4 percent on Wednesday at Rs. 108.85. The bidding for BPCL includes two stages: one, participation of qualified bidders in the EoI stage; and two, financial bids. Any private company with a net worth of over $10 billion will be eligible for bidding, or a consortium of not more than four firms will be allowed to participate.
According to reports, other than Vedanta, some private equity funds and/or pension funds have also placed EoIs. A day after the EoI deadline, the BPCL stock closed at Rs. 394.45 on Tuesday. The news of Vedanta placing an EoI, however, did not enthuse investors, with the stock price falling 2.85 percent on Wednesday to Rs. 383.2.
The government’s plan is to sell its entire shareholding in BPCL comprising 1.15 billion equity shares, with the transfer of management control to a strategic buyer, excluding the company’s 61.65 per cent in the Numaligarh Refinery in Assam.
