The consortium, led by India’s largest bank State Bank of India Ltd and ICICI Ltd, has agreed to dispense shares of Essar Oil to facilitate closure of the stake sale to Rosneft and the investment consortium led by Trafigura and UCP, sources told Sputnik.
Deal was signed during the bilateral summit between India and Russia in Goa last October. Essar Global had decided to sell its stake after the company was struggling to pay the debt of its refining and retailing oil business. According to the agreement signed last year, Rosneft will take a 49% stake in Essar Oil, which controls India’s second-largest oil refinery, while Russian investment group United Capital Partners and commodities trader Trafigura will take 24.5% each. Rosneft acquires 49% of the Vadinar refinery, one of the most sophisticated refinery in the Asia-Pacific region, possessing a complex infrastructure. The deal will pave the entry of Rosneft into India’s retail market as it will also own a vast network of 2,700 Essar-branded retail outlets across India.
Sources close to the consortium said that approval comes after Essar Global had assured that company would invest a part of the proceeds of deal in Essar Steel, which is one of the largest debt-ridden companies of India. Life Insurance Corporation of India, according to sources, has also given its approval for the transaction.