Rosneft consortium clinches ‘masterpiece’ $13bn Essar Oil deal

Essar petrol pumpRosneft’s bid to head up the largest ever foreign investment in India’s history looks set to become a reality after Essar Oil’s creditors last week withdrew their objections to the delayed $13bn takeover by a consortium led by the Russian energy giant.
The news was broken to Rosneft’s shareholders at its AGM in Sochi on Thursday. “Please be informed that the legal decision was received yesterday, which guarantees the entry of the company in Essar Oil’s capital,” Mr Sechin told shareholders, describing the acquisition as “a masterpiece.”
Originally agreed last October, the $13bn deal will see Rosneft take a 49% stake in a company that controls India’s second-largest oil refinery and 2,700 petrol stations across the country. The Russian investment group United Capital Partners and commodities trader Trafigura will take a further 24% each, leaving Essar Global with a stake of just 1%. On completion it will give the world’s largest listed oil producer a solid foothold in the fast-growing Indian market; according to forecasts released by BP Energy Outlook earlier this year India will be the largest growth market for energy consumption by 2035. 
The deal had been held up by several Indian banks with large exposures to both Essar Oil and its struggling sister company Essar Steel, who had sought assurances that Essar Global would use part of the proceeds of the oil business sale to invest in Essar Steel, in order to put that company on a more stable financial footing as it pursues debt restructuring.
The acquisition values Essar Oil at $10.9bn, and the investors will pay a further $2bn to acquire a deepwater port on India’s western coast from Essar Ports, which will be folded into Essar Oil.

Source: FT