BPCL divestment: Bidding to turn competitive on participation of PE players
The divestment of Bharat Petroleum Corporation Limited (BPCL) has long been on investors’ radar. The focus will only sharpen now as the market tries to assess potential bidders to the entity. With Vedanta’s interest already known, news that certain well known private equity investors are also among the interested parties looking to acquire the government’s stakes will boost competition and interest.
Apollo Global Management and Think Gas (promoted by I Squared Capital) are reportedly are among the interested parties. The interest evinced by these global investment management firms also reflects the good response the bidding process is receiving, boosting hope of better valuations.
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“The participation of marquee private equity players Apollo and I Squared with experience in the energy sector could heat up the competition,” said analysts at Emkay Global
BPCL has a vast retail network–20% share in retail petroleum products business–and huge refining capacities, while hydrocarbon exploration and production (E&P) assets remain attractive for global players vying for a pie of the Indian fuel market.
From an acquirer’s perspective, Macquarie India says, the key attractions of BPCL in addition to the access to 17,000 fuel retail stations also are the gas stakes (BPCL holds stakes in Petronet LNG and Indraprastha Gas Limited as well as has made investments in Mozambique gas).
“We are buyers of BPCL into the upcoming privatization by the government, albeit fully acknowledging timing uncertainties and government privatization is to unlock Sum-of-the-Parts valuation,” said Macquarie India.
