MUMBAI: About 8.7 crore shares, representing 4% of refining and oil marketing company Bharat Petroleum Corp (BPCL), are expected to be sold on the stock exchanges on Tuesday through block deals. The transaction, aggregating to at least Rs 3,774 crore (approximately $517 million) is part of the sale of the 15.9 crore BPCL shares, or 7.3%, that a trust managed by the company currently holds.
At Rs 435 per share, the floor price for the deal is at a nearly 7% discount to BPCL’s Monday close of Rs 467 on the BSE. BPCL currently has a market capitalisation of more than Rs 1 lakh crore, BSE data showed. The full 7.3% stake is currently worth about Rs 7,400 crore — that’s a little over $1 billion.
Although the company on Monday allowed the full 7.3% to be offloaded, market sources said that, in the first tranche, only about 4% is set to be sold. Till late Monday evening, the three brokers involved in the deal — arms of Citibank and Kotak Bank, as well as ICICI Securities — were selling it to institutional investors through the accelerated book-building process.
Under this process, the brokers managing the deal, after the close of the day’s trading, send out the term sheet to large institutions to express their interest to buy shares from the block. Once the book is built, the shares are traded in blocks the next day on the bourses.
In a communication to the BSE, BPCL said that a sub-committee of its board of directors had approved the sale of the company’s equity shares which are held by the BPCL Trust for Investment. The total number of equity shares being offered is nearly 15.9 crore shares as held by the trust, it said.
The sale of the stake comes as the government is on course to offload its 53% in the country’s second-largest fuel retailer to a private buyer, domestic or global. Although initially planned for complete divestment by the end of current fiscal year, as things stand now, the stake sale is expected to spill into the next year.