Russia’s Rosnef, (through its subsidiary, Petrol Complex Pte. Ltd) has acquired 49.13% stake Essar Oil Limited (EOL).
The deal represents Russia’s largest ever foreign investment into any country so far.
Rosneft CEO, Igor Sechin stated that “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.”
Rosneft is the leader of Russia’s petroleum industry and the world’s largest publicly traded oil and gas company by reserves and liquid hydrocarbon production. The closing of the deal is a remarkable achievement the Company: it 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.
The company recently announced the successful conclusion of the sale of 98.26% of EOL.
The remaining 1.74% stake continues to be held by retail shareholders.
Russian President Vladimir Putin and India’s Prime Minister Narendra Modi initiated the deal. EOL is largely Indian owned.
“The transaction marks the single largest outbound investment by a Russian company into any country”, said Kamal Taposeea, Chairman of Essar Energy Holdings Limited.
He said it will open a new chapter for Indo-Russian economic cooperation. It is also the single largest foreign investment in India and re-establishes India’s image as an attractive destination for foreign investments.
Essar Global Fund Limited (EGFL) is a global investor, owning a portfolio of companies that control and operate a number of world-class assets, focused on India and diversified across the core sectors of Oil & Gas, Steel, Power, Ports, Projects, Shipping, Mining, BPO and other services.
The Fund’s portfolio companies have aggregate revenues of about US$15 billion. The Fund is managed by its investment manager, Essar Capital Limited. Essar Energy Holdings Limited, Mauritius, an indirect subsidiary of EGFL, is a global investor, owning world-class oil & gas assets which includes Stanlow refinery in the UK and oil and gas blocks in India, Indonesia, Nigeria, Madagascar and Vietnam.
Commenting the transaction, Mr Jeremy Weir, CEO of Trafigura, said that: “our stake in Essar Oil also complements Trafigura’s growing presence in India at a time when the country’s economic outlook is positive.”
Founded in 1993, Trafigura is one of the largest physical commodities trading groups in the world. The Company has achieved substantial growth over the last ten years, growing turnover from USD12 billion in 2003 to USD98.1 billion in 2016.
Mr Yuri Soloviev, First Deputy President and Chairman of VTB Bank, has also expressed VTB Group’s interest in India.