Rosneft-led group acquires Essar Oil for nearly $13 billion

Russia's state-controlled oil giant Rosneft+ and its partners on Saturday took over India's second biggest private oil firm Essar Oil+ in an all-cash deal valued at about $13 billion.

Rosneft bought a 49 per cent stake in Essar Oil+ 's refinery port and petrol pumps, while Netherlands-based Trafigura Group Pte, one of the world's biggest commodity trading companies, and Russian investment fund United Capital Partners split another 49 per cent equity equally.

The remaining 2 per cent is held by minority shareholders after delisting of Essar Oil.

The deal has an enterprise value of close to $13 billion+ , which includes Essar Oil's debt of $4.5 billion and about $2 billion debt with the port company and power plant. Also, the near $3 billion dues to Iran for past oil purchases will continue to be on Essar Oil books.

Essar Oil, part of a steel-to-ports conglomerate controlled by the billionaire Ruia brothers, operates a 405,000-barrels-a-day refinery at Vadinar in Gujarat. The refining complex also has a captive power plant as well as a port and terminal facilities.

Essar Oil said it has signed two agreements for the sale.

"The first sale and purchase agreement envisages the sale of 49% to Petrol Complex Pte Ltd (a subsidiary of PJSC



Rosneft Oil Company); the second envisages the sale of the remaining 49 per cent to Kesani Enterprises Company Limited (owned by a consortium led by Trafigura and United Capital Partners) at an enterprise valuation of Rs 72,800 crore ($10.9 billion).

"An additional Rs 13,300 crore ($2 billion) will be paid for the acquisition of Vadinar Port, which has world-class storage and import/export facilities," it said

The deal would help the Essar Group, one of India's largest and most indebted conglomerates, trim its about Rs 88,000 crore (over $13 billion) debt and ward off creditor pressure.

The deal was announced as Indian Prime Minister Narendra Modi met Russian President Vladimir Putin during a meeting of the leaders of the BRICS countries here.

The deal is the single largest foreign investment in the Indian refining sector and will strengthen the ties between the world's largest oil producer and the world's fastest growing fuel consumer.

The acquisition is the biggest foreign acquisition ever in India and Russia's largest outbound deal.

The all cash deal is expected to close in first quarter of 2017