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Analytics // Mergers and Acquisitions

$12.9 bln Essar Oil deal with Rosneft-led consortium concluded: 10 things to know

21 August 2017 , 12:00Neftegaz.RU453


Essar Energy and Oil Bidco successfully concluded sale of Essar Oil Limited to Rosneft and Trafigura-UCP Consortium for $12.9 billion on August 21, 2017. The deal is Russia's largest ever foreign investment, and India's largest FDI.


Here are 10 important points to know about India's biggest FDI deal:

1. Transaction includes sale of Essar Oil's refinery and retail assets ($10.9 bln) together with Vadinar Port and related infrastructure assets ($2 bln) Mauritius, 21 August 2017: The controlling shareholders of Essar Oil Limited (EOL)- Essar Energy Holdings Limited and Oil Bidco (Mauritius) Limited, both companies incorporated and managed under the laws of Mauritius - are pleased to announce the successful conclusion of the sale of 98.26% of EOL.

2. Rosneft (through its subsidiary, Petrol Complex Pte. Ltd) has acquired 49.13% stake, and Trafigura-UCP consortium (through Kesani Enterprises Company Limited) has acquired an equal stake.
The remaining 1.74% stake continues to be held by retail shareholders.


3. The deal was initiated in the presence of Narendra Modi and Vladimir Putin. This investment, which represents Russia's single largest foreign investment made anywhere in the world, will open a new chapter for Indo-Russian economic cooperation.
The transaction is also the single largest foreign investment in India, and re-establishes the country's image as an attractive destination for foreign investments.

4. Following this transaction, Essar has now helped attract more than $30 billion of foreign investments into India.
Previously, in 2007, Essar Group, together with Hutchison Whampoa, brought Vodafone into India in a $11.1 billion transaction.

5. The deal includes EOL's 20 MTPA Vadinar Refinery (one of the world's largest, with a complexity index of 11.8), its pan-India network of over 3,500 retail outlets (representing India's largest private sector retail network), as well as the associated refinery infrastructure.


6. The transaction perimeter also includes the Vadinar Port (capacity of 58 million tonnes with world-class dispatch and storage facilities) and the Vadinar power plant (a 1,010 MW state-of-the art, multi-fuel unit that supplies both power and steam to the Vadinar refinery).

7. Essar Founder Shashi Ruia said: «Today is a historic day for Indo-Russian economic ties. This transaction reflects the shared vision of 2 of the world's most dynamic leaders. I congratulate Rosneft, Trafigura and UCP for investing in a world-class oil business, which we are proud to have built. For Essar, the closure of this landmark transaction ushers in a new phase of growth across our portfolio of businesses that hold great promise in India's enduring development story.»

8. Prashant Ruia, Director, Essar Capital, said: «With this deal, we have completed our monetisation and deleveraging programme, which is the largest undertaken by any corporate in recent years. We have substantially deleveraged our portfolio companies' balance sheets, reducing debt by over $ 11 billion. With the completion of our capex programme, we now look forward to a period of growth in our wider portfolio of businesses.»

9. Dhanpat Nahata, Director, Essar Energy Holdings Limited, said: «With the closure of this landmark transaction, Essar Energy has set a stellar example of conceiving, building and nurturing a world-class asset and then monetising it at the right time. I would like to welcome Rosneft, Trafigura and UCP as the new shareholders of EOL, and thank my colleagues, the deal team of Essar Energy and our advisors for this achievement.»

10. Commenting on the closing of the transaction, Rosneft CEO, Igor Sechin, stated: «This day marks the beginning of a new chapter for EOL. Together with our partners we intend to support the company to significantly improve its financial performance and, in the medium term, adopt an asset development strategy. The closing of the deal is a remarkable achievement for Rosneft too: the Company has entered the high-potential and fast-growing Asia-Pacific market. The acquisition of the stake in the Vadinar refinery creates unique opportunities of synergies with existing Rosneft-owned assets and will help improve efficiency of supply to other countries within the region.»


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