Essar Energy and Oil Bidco have successfully concluded the sale of Essar Oil Limited for US$ 12.9 billion. Essar Oil has been sold to Rosneft and Trafigura-UCP Consortium. The Essar Oil deal is significant since it is the largest Foreign Direct Investment (FDI) in India. It is also the largest ever foreign investment by Russia. The deal includes the sale of various refineries and retail assets of Essar Oil, which are valued at US$ 10.90 billion. It also includes infrastructure assets such as Vadinar Port and others, valued at US$ 2.0 billion. The deal represents sale of 98.26 percent stake in Essar Oil Limited. As per the new ownership structure, Rosneft has acquired 49.13 percent stake. Another 49.13 percent has been acquired by the Trafigura-UCP consortium. The rest 1.74 percent stake is held by retail shareholders.
With this deal, Essar has yet again helped India to attract foreign investments. Till now, Essar has entered into various business deals, resulting in a cumulative FDI inflow to India of more than US$ 30 billion. One of the biggest deals was in 2007, when Essar, in partnership with Hutchison Whampoa, was instrumental in bringing Vodafone to India. The Vodafone deal was worth US$ 11.1 billion.
The sale of Essar Oil is part of the company’s monetization and deleveraging programme. It is the largest deleveraging program ever to be witnessed in India’s corporate history. The sale of Essar Oil has helped the company to reduce its debt by more than US$ 11 billion, which is approximately Rs 70,000 crore. The successful completion of the deal will allow Essar Energy to focus on its other companies and work towards increasing growth in its wider portfolio of businesses.
Speaking about the sale of Essar Oil, the company’s founder Mr. Shashi Ruia said, “Today is a historic day for Indo-Russian economic ties. This transaction reflects the shared vision of two of the world’s most dynamic leaders. I congratulate Rosneft, Trafigura and UCP for investing in a world-class oil business, which we are proud to have built. For Essar, the closure of this landmark transaction ushers in a new phase of growth across our portfolio of businesses that hold great promise in India’s enduring development story.”
In a letter congratulating Essar on the deal, Minister of State for Petroleum & Natural Gas, Mr. Dharmendra Pradhan, said, “I congratulate Essar on the conclusion of the US$12.9 billion Essar Oil deal. An asset, which was truly ‘Made in India’, has attracted investment interest from world class entities, demonstrating the spirit of dynamic entrepreneurship in India. I Welcome Rosneft, Trafigura, and UCP to participate in the India growth story and wish them success.”
The successful completion of sale of Essar Oil does not indicate Essar Energy’s exit from the oil & gas industry. The company will continue to be active in the oil & gas sector through its investments in the sector and exploration and production (E&P) activities across the globe. The company owns various state-of-the-art oil and gas assets such as the Stanlow refinery in the UK. It also has various oil & gas blocks in Indonesia, Nigeria, Madagascar, and Vietnam.
Even after the sale of Essar Oil, the parent company Essar continues to be a leading global conglomerate with aggregate revenues of around US$ 15 billion. Essar has a diversified portfolio that comprises various world-class businesses across sectors such as steel, power, ports, shipping, mining, BPO, etc. With a significant percentage of its debt now cleared, Essar is looking forward to boosting growth in its various businesses.Essar Energy also remains committed to exploring new business opportunities in India and attracting more foreign investments for the country.