India’s capital market regulator is unlikely to present exemption to the corporate buying BPCL from making obligatory open affords for Petronet LNG and Indraprastha Gas share purchases which might be countered by different promoters of the 2 companies reminiscent of GAIL to save lots of from going personal, officers stated.
Bharat Petroleum Corporation Ltd (BPCL) holds 12.5 per cent of the shareholding in India’s largest liquefied pure fuel importer, Petronet, and a 22.5 per cent stake in metropolis fuel retailer, IGL. It is a promoter of each the listed firms and holds board positions.
As per the authorized place evaluated by the Department of Investment and Public Asset Management (DIPAM) – the division operating the method for the sale of the federal government’s total 52.98 per cent stake in BPCL – the acquirer of BPCL must make open affords to the minority shareholders of Petronet and IGL for the acquisition of 26 per cent shares.
To keep away from such a state of affairs, an exemption request was made to the Securities and Exchange Board of India (SEBI).
“We have been informally told that the exemption request is unlikely to be acceded as SEBI mandate is to protect minority shareholder interest,” a prime authorities official, who didn’t want to be named as the knowledge isn’t public, stated.
If the open affords are profitable, the acquirer of BPCL would additionally change into the biggest shareholder in Petronet (12.5 per cent of BPCL plus 26 per cent from the general public) and get a controlling holding in IGL (22.5 per cent of BPCL and 26 per cent from public).
“So in essence, the two companies will also get divested alongside BPCL,” the official stated.
To examine this from occurring, the opposite promoters of Petronet and IGL would additionally launch counter affords to purchase an equal 26 per cent stake in order to make sure public sector companies retain a controlling stake. PTI had on July 21 first reported on the transfer by promoters of Petronet and IGL to save lots of the businesses.
“We have a clear understanding that there is no bar on other promoters from launching share purchase offers and they will do it,” he stated.
State-owned fuel utility GAIL is an equal promoter of IGL alongside BPCL. In Petronet, GAIL, refiner Indian Oil Corp (IOC) and Oil and Natural Gas Corp (ONGC) are joint promoters alongside BPCL, holding 12.5 per cent stake every.
The remaining shares in each Petronet and IGL are held by public and institutional buyers.
Originally, DIPAM had on April 19 made a request to SEBI for a grant of exemption for an open provide in Petronet and IGL.
SEBI, nevertheless, conveyed that the appliance must be made within the prescribed format by BPCL because the promoter of IGL and Petronet, the official stated including BPCL subsequently made such an utility.
The different different to keep away from the brand new proprietor being compelled to make an open provide was for BPCL to promote part of its shareholding in Petronet and IGL, thereby shedding its promoter standing.
However, BPCL is against such an concept as will probably be a price destroyer.
The authorities’s 52.98 per cent stake in BPCL is valued at about Rs 51,800 crore on the present share worth. The requirement for making an open provide for an extra 26 per cent to minority shareholders of the corporate will value an extra Rs 25,400 crore at present costs.
On prime of it, an open provide for a 26 per cent stake in IGL would value the acquirer an extra Rs 9,464 crore and the same provide for Petronet would value about Rs 9,000 crore.
Mining-to-oil conglomerate Vedanta and personal fairness companies Apollo Global and I Squared Capital’s arm Think Gas are within the race to purchase the federal government’s stake in BPCL.
The stake sale in India’s second-largest gasoline retailer is essential to lift a file Rs 1.75 lakh crore from disinvestment proceeds in fiscal 2021-22 (April 2021 to March 2022).
BPCL will give the customer possession of round 15.33 per cent of India’s oil refining capability and 22 per cent of the gasoline advertising share.
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