BPCL Shares Tank 5% After Vedanta's Anil Agarwal Says Disinvestment Being Reviewed

BPCL shares drop as much as 5.4 per cent to Rs 372.3 apiece on BSE in Monday’s trade, after Vedanta’s Anil Agarwal says the BPCL disinvestment process is being reviewed. Agarwal told Moneycontrol, “It (divestment) will not happen. They’ve said that they have withdrawn the offer, they will come back with a new strategy. Generally, they have given a statement, they’re not going ahead. Not in this format.”

The government has not officially made a statement on whether the plan has been dropped in its current form. However, the development is a setback for BPCL, which had seen strong interest from retail and institutional investors over the past few years in the hope that the privatisation of the state-owned refiner would trigger a sharp improvement in its financials and capital allocation.

TV Narendran, President CII said that the government’s intent is clear on divestment, timing may be an issue for BPCL. He further said there may be some hiccups in the process but hopes government will continue in the same direction.

The central government had a plan to sell its entire 53 per cent stake in BPCL to private players in 2021-22, but after delays, this target was shifted to 2022-23. Vedanta Group, Apollo Global Management, and private equity major I Squared Capital-backed Think Gas were the buyers to show interest.

Recently, Minister of State for Finance Bhagwat Karad told in the Rajya Sabha that the disinvestment process of oil marketing firm Bharat Petroleum Corporation Ltd (BPCL) has reached the second stage and many expressions of interest (EoI) have been received regarding its transition.

The government is selling its entire 52.98 per cent stake in BPCL for which three expressions of interest (EoIs), including one from billionaire Anil Agarwal-led Vedanta Group, have been received. Financial bids are yet to be invited.

At the current market price, the 52.98 per cent stake is valued at about Rs 45,000 crore. The government invited expression of interest from bidders in March 2020 from selling BPCL and by November 2020 at least three bids had come in.

Last year, some estimates had shown that the centre was eyeing Rs 70,000 crore from the privatisation of BPCL and Vedanta and two other overseas funds were among the front runners for the state-owned company.