Mumbai Capital

Essar Oil delists in Rs 3,745 cr payout

On Wednesday, Essar Oil completed the delisting of the company valued at Rs 38,000 crore by paying Rs 3,745 crore to shareholders, making it the largest privatisation exercise in Indian corporate history.

The delisting also established the Ruia brothers-owned Essar Group among one of the world’s largest privately-held conglomerates with revenues of $35 billion.

Oil Bidco (Mauritius) Limited, promoter of Essar Oil, on Wednesday announced the completion of Essar Oil’s delisting offer process, taking it a step closer to selling a significant stake in Essar Oil to Russian energy major Rosneft.

Of the 14.25 crore shares held by public shareholders, the promoters have acquired 10.1 crore shares through an offer made to shareholders, as against the requirement of 9.26 crore shares for delisting, said a company statement.

While the floor price for the delisting was set at Rs 146.05 per share, Oil Bidco (Mauritius) Limited has agreed to pay Rs 262.80 per share — a premium of 80 per cent over the offer price, the statement added.

Shareholders tendered their shares between December 15, 2015 and December 21, 2015, through the reverse book building window made available to them under the delisting regulations.

“We are happy that we have been able to reward our public and institutional shareholders for the faith they reposed in us over the years. I want to take this opportunity to thank investors, stock exchanges and regulators for their support in this journey,” said Shashi Ruia, founder chairman, Essar Group, on the closure of the transaction.

Shareholders who have not tendered their shares in the delisting offer can offer their shares to the promoters at the delisting price for a period of one year from the date of delisting.

Listed in 1995

Essar Oil, listed in 1995 with a market capitalisation of Rs 2000 crore, saw a 19-fold jump in its market capitalisation in the last 20 years to over Rs 38,000 crore at the delisting price as the company more than doubled its refinery capacity to 20 million tonnes per annum (mtpa). The refinery at Vadinar in Gujarat commenced commercial operations in May 2008.

Over the years, Essar Group, through privatisation of its corporate entities Essar Oil Ltd, Essar Ports Ltd, Essar Steel Ltd and India Securities Ltd, has made a payout of over Rs 7,200 crore to investors, thus providing substantial returns, claimed an Essar statement.

Till date, the biggest payout made for a delisting was also by an Essar company, in respect of Essar Ports Limited, where the promoters made a payout of Rs 1,430 crore as it was delisted at Rs 133 per share — a premium of 42 per cent against the floor price of Rs 93.66 per share, it added.

Essar Oil promoters have given an undertaking that in case the delisting price is lower than the price received by promoters in the potential transaction with Rosneft, the public shareholders who exit in the delisting offer will receive the same price as the promoters.

“Promoters who cannot create value for shareholders should delist and take their companies private,” Deven Choksey, MD, KRChoksey Investment Managers Private Limited told The Hindu , adding that Essar Oil’s delisting is a better deal from the shareholders’ point of view as they tend to gain 50 per cent more in the value of the company’s shares.

Shareholders of Essar Steel and London-listed Essar Energy Plc have earlier lost money in the companies’ delisting process.

Essar Oil shares closed marginally higher at Rs 257, valuing the company at Rs 37,282 crore in a weak Mumbai market on Wednesday.

Post the delisting, the privately-held Essar Group will have global operations spanning oil refining, power, steel, ports, shipping, EPC and BPO.

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Printable version | Jan 22, 2021 6:41:55 AM |

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