India's Essar agrees to sell oil arm to Rosneft-led group | Reuters

By Douglas Busvine and Denis Pinchuk | GOA, India GOA, India India's debt-laden Essar Group confirmed on Saturday that it has agreed to sell a 98 percent interest in its Essar Oil unit to a consortium led by Russia's Rosneft, giving the energy giant a gateway into the world's fastest growing fuel market.The deal will see Rosneft, along with its partners Trafigura and United Capital Partners (UCP), pay $10.9 billion for Essar's refining and retail assets. Separately, $2 billion will be paid toward the acquisition of the Vadinar port in the western state of Gujarat, along with certain import and export facilities.Sources familiar with the matter had told Reuters on Friday that a deal was imminent.It will give Rosneft a 49 percent stake in Essar Oil, with 49 percent being split equally between Trafigura and UCP.

Reuters October 15, 2016 21:45:06 IST
India's Essar agrees to sell oil arm to Rosneft-led group
| Reuters

Indias Essar agrees to sell oil arm to Rosneftled group
 Reuters

By Douglas Busvine and Denis Pinchuk
| GOA, India

GOA, India India's debt-laden Essar Group confirmed on Saturday that it has agreed to sell a 98 percent interest in its Essar Oil unit to a consortium led by Russia's Rosneft, giving the energy giant a gateway into the world's fastest growing fuel market.The deal will see Rosneft, along with its partners Trafigura and United Capital Partners (UCP), pay $10.9 billion for Essar's refining and retail assets. Separately, $2 billion will be paid toward the acquisition of the Vadinar port in the western state of Gujarat, along with certain import and export facilities.Sources familiar with the matter had told Reuters on Friday that a deal was imminent.It will give Rosneft a 49 percent stake in Essar Oil, with 49 percent being split equally between Trafigura and UCP. The deal was carefully structured to avoid falling foul of western sanctions against Russia over its role in the Ukraine crisis."Rosneft will not get a controlling stake, partly because of these reasons (sanctions)", Andrey Kostin, head of Russian lender VTB which advised Essar on the deal, told Reuters.

The deal helps Russia to deepen economic ties with India that stretch back to the Soviet era. The purchase is the biggest foreign acquisition ever in India and Russia's largest outbound deal, according to Thomson Reuters data. It was finalised after Indian Prime Minister Narendra Modi and Russian President Vladimir Putin met at a summit in the western state of Goa on Saturday.The all-cash deal will give Rosneft and its partners control of Essar's 20 million tonne refinery in Gujarat, and its retail fuel outlets in India, where growth for refined petroleum goods in the next five years is expected to be in the 5 percent to 7 percent range.

"Rosneft is entering one of the most promising and fast-growing world markets," said its Chief Executive Igor Sechin in a statement, adding that the deal gives it "unique opportunities for synergies" with its existing assets.Separately, Rosneft said it would use Venezuelan crude to supply the Vadinar refinery.The closing of the transaction is conditional on receiving requisite regulatory approvals that are expected before the end of the first quarter of 2017.

The deal also reduces some of the pressure on Essar, which is controlled by the billionaire Ruia brothers. The group has a presence in oil and gas, steel, ports and power, and has been under pressure from its lenders to reduce its debt burden.In parallel with the deal, Russian lender VTB said on Saturday it would lend Essar about $3.9 billion toward debt reconstruction.Chanda Kochhar, chief executive of ICICI Bank Ltd - one of Essar's top lenders - welcomed the deal, noting that it has been working closely with Essar to deleverage its stressed balance sheet. (Writing by Euan Rocha and Jack Stubbs; Editing by Clarence Fernandez and Andrew Bolton)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

also read

India contributes funds for revival work of Gandhi’s Tolstoy Farm in South Africa
World

India contributes funds for revival work of Gandhi’s Tolstoy Farm in South Africa

Efforts by the Mahatma Gandhi Remembrance organisation (MGRO), started by Gandhian follower Mohan Hira, have led to gradual steps to revive the venue as a tourist attraction

NEET UG 2021: Last date for correction in application form extended to 14 October
India

NEET UG 2021: Last date for correction in application form extended to 14 October

Candidates can make changes in the following fields – gender, e-mail address, nationality, category, sub-category, and fields of second phase

ICAI CA December Exam 2021: Correction window opens; make changes till 10 Oct. at https://icaiexam.icai.org/
India

ICAI CA December Exam 2021: Correction window opens; make changes till 10 Oct. at https://icaiexam.icai.org/

The correction window is available for all three levels of the exam including CA Intermediate, CA Foundation, and CA Final