The government is examining yet another proposal to see whether other PSU oil promoters of Petronet LNG (PLL) and Indraprastha Gas Ltd. (IGL) could participate in the mandatory open offer to shareholders of these entities triggered post privatisation of Bharat Petroleum Corporation Ltd (BPCL).
Sources said that along with BPCL, other oil PSUs Indian Oil Corpiration (IOC), Oil and Natural Gas Corporation (ONGC) and GAIL India are joint promoters of PLL and IGL. These entities would reduce their share holding in these companies if only BPCL goes ahead with the open offer post privatisation. This would change the PSU status of IGL and PLL, which the government does not intend to pursue at this juncture.
As part of the solution, it is being explored whether IOC, GAIL, ONGC can participate along with BPCL in the open offer triggered post sale of government’s 52.98 per cent equity in BPCL. If market regulator SEBI gives approval for such open offer, each of the existing promoter could retain their shareholding or increase it in PLL and IGL.
Also, such an exercise would reduce monetary burden on the new owner of BPCL while preventing erosion in BPCL’s valuation that can happen if PLL and IGL is separated from BPCL before its sale.
BPCL holds 12.5 per cent of the shareholding in India’s largest liquefied natural gas importer, Petronet, and a 22.5 per cent stake in city gas retailer, IGL. Gas utility GAIL holds a 22.5 per cent stake in IGL and it along with BPCL is co-promoter of the city gas retailer.
In the case of Petronet, GAIL, refiner Indian Oil Corporation (IOC) and oil producer ONGC hold a 12.5 per cent stake each – the same as BPCL.
BPCL is also seeking exemption for successful bidder of the company from mandatory open offer to be made to shareholders of IGL and PLL. It has opposed any plan to separate the two entities from it as it would affect company’s valuation.
Open offer can make BPCL’s acquisition expensive by another about Rs 20,000 crore for potential bidders that could further deter interest in company in the time of the pandemic. Both BPCL and Centre do not want to wane investor interest in the refiner as additional spending could make the already large sized deal further expensive.
The sale of government’s 52.98 per cent stake in BPCL is valued at about Rs 55,000 crore at the current share trading price. The requirement for making an open offer for additional 26 per cent to minority shareholders of the company will cost an additional Rs 26,700 crore.