After Privatization Of BPCL, Other IOC Companies Can Buy Shares
After privatization of BPCL, these companies got the freedom to buy shares, Dipam made this arrangement.
State-owned Bharat Petroleum Corporation Ltd. In the event of an open offer after the privatization of BPCL, Petronet LNG, and Indraprastha Gas Ltd. (IGL) shares can be bought by IOC, GAIL, and ONGC.
Sources said that BPCL holds 12.5 percent in Petronet, the country’s largest liquefied natural gas importer, and Indraprastha Gas Ltd, which sells retail gas.
(IGL) holds a 22.5 percent stake. BPCL is the promoter of both the listed companies and is on their Board of Directors.
As per the Department of Investment and Public Asset Management’s (DIPAM) legal status assessment.
BPCL will have to make an open offer to minority shareholders of Petronet LNG and IGL to buy a 26 percent stake in the acquirer.
After privatization of BPCL, DIPAM is in the process of selling the entire 52.98 percent stake of the government in BPCL.
To avoid such a situation, DIPAM has requested the market regulator SEBI to give relaxation in open offers in Petronet and IGL, said three people associated with the matter.
According to sources, however, the Securities and Exchange Board of India (Sebi) has said that BPCL, as a promoter of IGL and Petronet, will need to apply in the prescribed format, after that BPCL was applied.
It said that in case of non-availability of exemption and open offer.
Petronet and IGL’s other public sector promoters may jointly participate in such a share offer with the acquirer of BPCL to increase their stake in these companies.
Gas company GAIL holds a 22.5 percent stake in IGL and is a co-promoter along with BPCL in the company.
In Petronet’s case, GAIL, refinery company Indian Oil Corporation (IOC), and oil and gas producer ONGC hold 12.5-12.5 percent. BPCL also has a similar stake.
The remaining shares of Petronet and LNG are held by public and institutional investors.
With BPCL becoming a private company, the shareholding of the public sector in IGL and Petronet will be reduced. This may change the position of both companies.
BPCL will acquire a 48.5 percent stake in IGL after the open offer by the acquiring company. Petronet will hold 38.5 percent, which is higher than the 37.5 percent stake held by IOC, ONGC, and GAIL.
According to sources, in order to keep these companies as public sector entities.
It has been suggested that IGL and other promoters of Petronet may jointly participate in the open offer with the acquirer of BPCL.
With this, they can increase their stake in these companies by acquiring some shares of common shareholders.
This will ensure that PSUs continue to be the largest shareholders in these companies. This will serve the purpose of the government.
Another option could have been for BPCL to sell a part of its stake in Petronet and IGL to prevent the acquirer from being forced into an open offer, thereby losing its promoter status.
However, BPCL is not in favor of it, says that this will affect the evaluation.
According to sources, the government is of the view that the acquirer of BPCL should not be forced into open offers for Petronet and IGL.
It believes that open offers for Petronet and IGL may deter bidders who are primarily eyeing BPCL’s 22 percent stake in refining assets and fuel marketing business.
The value of the government’s 52.98 percent stake in BPCL is Rs 52,125 crore at the current share price.
The open offer to the small shareholders of the company for an additional 26 percent stake will entail an additional cost of Rs 25,580 crore.
In addition, there will be an additional cost of Rs 9,800 crore for the open offer for 26 percent in IGL and about Rs 8,500 crore in the case of Petronet.
