In the largest inflow of foreign direct investment, Russia’s state-controlled oil giant Rosneft and its partners have taken over India’s second biggest private oil firm Essar Oil in an all-cash deal valued at about $13 billion.

 

 

Rosneft bought a 49%  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%  equity equally. The remaining 2% will be held by minority shareholders after delisting of Essar Oil.

 

 

The deal has an enterprise value of close to $12.9 billion – $10.9 billion for a 20 million tonne a year refinery in Gujarat and over 2,700 petrol pumps and another $2 billion for Vadinar port in Gujarat. The deal factors in Essar Oil’s debt of about $4.5 billion and about  $2 billion debt with the port company.

 

 

 

Also, the near $3 billion dues to Iran for past oil purchases will continue to be on Essar Oil's books. Trafigura, which has been funded by Russian bank, may sell its stake to Rosneft at a later date.

 

Image courtesy Guruprasath R