ONGC hikes first ever debtraising by 40% to fund HPCL acquisition

State-owned Oil and Natural Gas Corp (ONGC) has increased its first ever debt-raising plans by 40% to as much as ₹35,000 crore to fund its ₹36,915crore acquisition of Hindustan Petroleum (HPCL).

The acquisition would create India’s first integrated oil company. This would be ONGC’s biggest acquisition and second buyout this fiscal after its ₹7,738 crore acquisition of 80% stake in Gujarat State Petroleum Corp’s KG basin gas block.

ONGC chairman and managing director Shashi Shanker said the two deals would not affect the company’s overseas acquisition plans as “with a consolidated balance sheet (of ONGC and HPCL), we would be better equipped to take higher risks and eye better assets”.

The company had on Saturday announced buying of government’s 51.11% stake in India’s third largest state-owned oil refiner and marketing company for ₹473.97 per share in an allcash deal that is to be closed before the month-end.

Refusing to divulge details of how the deal would be funded, he said the company’s board has approved raising of the borrowing limit from ₹25,000 crore to ₹35,000 crore. This will be the company’s first ever debt. “We will use our (₹12,000-13,000 crore) cash first and then the liquid assets and debt will be last,” Shanker told reporters. “This order can change, because we won’t sell the liquid assets in distress. Also, we have offers for over ₹50,000 crore debt at very competitive rates, both foreign currency and local.”

ONGC holds 13.77% stake in Indian Oil Corp (IOC), which at Friday’s closing price is worth ₹25,790 crore.

NEW DELHI: