BPCL seeks open offer exemption as govt eyes exit

Privatisation bound Bharat Petroleum Corporation Ltd is seeking exemption for successful bidder of the company from mandatory open offer to be made to shareholders of two promoted companies - Petronet LNG and Indraprastha Gas Ltd.

Sources said, the oil refiner is looking to get the Securities and Exchange Board of India (Sebi) to give exemption for the open offers to the successful bidder of BPCL as already done when ONGC acquired a government stake in HPCL. BPCL is one of the promoters of both PLL and IGL with a shareholding of 12.5% and 22.5% respectively.

The promoter status in these companies means that once BPCL changes hands to new entity post the strategic sale process, its new owners will have to make open offer for another 26% stake in both the promoted companies as per SEBI regulations. This would make BPCL's acquisition expensive by about Rs 20,000 crore for potential bidders that could further deter interest in company in the time of the pandemic.

"It is right for BPCL to look for exemption from open offer in case of PLL and IGL. But how this exemption is given, needs to be watched as the earlier experience in case of the ONGC-HPCL deal, the promoters of both the firms were the same i.e. the government of India and there was no change of ownership," said an energy sector expert not willing to be named.

Sources said that open offer exemption has been discussed by BPCL management in their meeting with disinvestment department Dipam. But the thinking in the government seems to be more inclined towards BPCL shedding its promoter status in the two companies by selling stake before its own strategic sale.

Both BPCL and Centre do not want to wane investor interest in the refiner as additional spending could make the already large sized deal further expensive.