Overview

• Numaligarh Refinery Limited (NRL), a subsidiary of Bharat Petroleum Corporation Limited (BPCL) operates a 3 MMTPA refinery in Numaligarh, Assam. 
• As on Dec 31, 2020, BPCL holds 61.65% stake in NRL along with OIL (26%) and Govt of Assam (12.35%)
• OIL in consortium with EIL had submitted its EOI expressing interest to acquire entire Equity stake of BPCL, along with management control in NRL
• SBICAPS was appointed as Transaction Advisor

Deal Highlights

• Consortium of Oil India Ltd and Engineers India Ltd, jointly acquired 58.53% Equity stake in NRL, with OIL acquiring 54.16% Equity stake and EIL acquiring 4.37% Equity stake
• Being located in North-East India, NRL enjoys excise duty exemptions contributing to ~90% of its operating profits. Negotiations with BPCL and DIPAM were held to arrive at  valuation for BPCL’s stake in NRL 
• Govt of Assam exercised its Right of First Offer (ROFO) to acquire additional stake in NRL for a total consideration of Rs 5,000 Mn and may likely purchase additional shares from OIL at same valuation, to further increase its stake in NRL to 26%

SBICAPS Value Add

• Since election process of State Govt was ongoing in Assam and Model Code of Conduct was in force in the state, Govt of Assam was not able to exercise its ROFO. SBICAPS structured the transaction in such a way that it may be successfully closed within the fiscal.
• SBICAPS, as Transaction Advisor managed and coordinated the complete process of acquisition of shares and assisted OIL consortium during valuation and negotiations, culminating into successful closure of transaction.