Essar’s $12.9bn deal with Rosneft gets crucial LIC approval

Life Insurance Corp. of India (LIC) approved the $12.9 billion acquisition of Essar Oil by Russia’s Rosneft PJSC after the Essar group, controlled by the billionaire Ruia brothers, agreed to pay some of the money it owes the state-owned insurer before closing the transaction.

Three persons with direct knowledge of the matter, including an executive at LIC, confirmed this. They added that the Essar group was in the process of making the payments to LIC after the insurer gave in-principle approval for the deal. None of the three wanted to be identified.

Spokespersons at LIC and Essar did not respond to emails seeking comment.

Originally, Essar, through two of its group companies, owed at least ₹2,300 crore to LIC.

Some part of this has been paid back but around ₹1,200 crore is still due, said one of the three people.

“Essar agreed about a week back to make a part payment against its outstanding dues so that LIC can classify the debt as a standard asset in its books. The deal is now well on its way to closure,” added this person.

On May 15, Mint reported that LIC would clear the deal only after the Essar group paid at least a part of its dues to the state-run insurer.

Reuters had reported on 11 May that apart from LIC, five lenders—IDBI Bank Ltd, Punjab National Bank, Syndicate Bank, Indian Overseas Bank and IFCI Ltd—were also holding up the deal. Reuters added that Syndicate Bank and Indian Overseas Bank were close to approving the deal, citing people it didn’t identify.

According to Indian rules, all lenders need to approve the deal.

The transaction, once completed, will be the largest IndoRussian deal ever involving a listed company.

It was originally scheduled for closure by March, but was delayed after some lenders, including LIC, refused to approve the acquisition.