Vedanta on the lookout for a partner to jointly bid for BPCL, say sources

  • Vedanta is looking at a mix of debt and equity to raise funds for acquiring BPCL

  • Buying a 75 percent stake in BPCL would cost Vedanta Rs 64,200-97,600 crore depending on the price (Rs 395 to 600 per share)

New Delhi: Vedanta Group has thrown its hat in the ring to acquire the government’s stake in state-run Bharat Petroleum Corporation Ltd (BPCL), however, it faces an uphill task in raising funds for the deal because of its precarious financial position. However, Vedanta is still hopeful and is looking at a mix of debt and equity to raise funds for acquiring BPCL, said sources aware of the matter. They added that the Anil Agarwal-led conglomerate is keen to bring equity partners on board to jointly bid for BPCL.

Sources also said that the company has begun discussions with several global equity funds for the same.

Vedanta looks to raise $8 billion for buying BPCL

Vedanta is planning to raise as much as $8 billion for buying the government’s stake in the company, said a report published by Livemint. According to a report published by JP Morgan in November this year, buying a 75 percent stake in BPCL — 53 percent from the government and 22 percent via open offer — would cost Vedanta Rs 64,200-97,600 crore depending on the price (Rs 395 to 600 per share).

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Vedanta’s consolidated debt at $7.7 billion

Vedanta’s consolidated debt stood at $7.7 billion at the end of March 2020. The company’s unsuccessful attempt at delisting itself in October this year has also dealt a blow to the company’s finances. The delisting would have yielded the company easier access to cash. Earlier in December, Moody’s Investors Service downgraded Vedanta Resources’ credit rating further into junk territory. The November report by JP Morgan had said, “While BPCL’s dividend payments could cover the cost of debt of any acquisition, the question we have is how would Vedanta Ltd (an Indian unit of Vedanta Resources) secure funding, given the worries on leverage at Vedanta and the parent.”

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