Apollo Global, I Squared Capital rival Vedanta for buying stake in BPCL

Vedanta, Apollo Global, and I Squared Capital have responded to the Centre’s decision to shed its controlling stake in Bharat Petroleum Corporation (BPCL).

currently holds a controlling stake in Cairn Oil & Gas, India’s largest private sector crude oil producer, and maybe the keenest to diversify into the refining business.

The acquisition would de-risk the group from crude oil price volatilities and also future proof it with a commanding interest in the petrochemical business.

But promoter Anil Agarwal might not have a cake walk as both and I Squared Capital already have their fingers sunk deep into India’s energy ecosystem. Of the two, is clearly the much larger fish with assets worth $433 billion under its management, significantly overshadowing I Squared Capital’s $13 billion assets under management (AUM).

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“Apollo is a major player with a $77 billion private equity portfolio, and an energy-savvy investor. Among its most notable investments, Apollo acquired LyondellBasell (Reliance Industries was also interested) under bankruptcy in 2009, which yielded six times returns when it exited in 2014 for $12 billion. I Squared, though smaller with $13 billion AUM, is also a focused player in energy and utilities, and has generated 30-40 per cent compound annual growth rate returns in certain investments in the sector,” Sabri Hazarika and Tanay Gabhawala of Emkay Global said in a joint note.


also has significant control over Welspun Corporation in India, where it manufactures pipes for oil and gas transportation. This group has a history of aggressively acquiring oil and gas sector assets that are mostly focused on North America and in the upstream value chain. So, like Vedanta, acquiring a refining and marketing major like makes sense.

I Squared Capital recently garnered much attention when it sold its stake in Amplus Energy Solutions to Malaysia’s state-owned oil and gas firm Petronas. But the exit from the solar business virtually coincided with the rising interest in India’s city gas distribution (CGD) projects through the acquisition of Think Gas. The company presently holds six licences to operate CGD networks across 11 districts spread over Punjab, Madhya Pradesh, Bihar, and Uttar Pradesh. I Squared Capital’s expression of interest (EoI) for is also through Think Gas.

The current valuation of is also very lucrative. According to analysts, BPCL’s implied dividend income can comfortably meet the cost of funding. With the current market capitalisation of BPCL, acquiring the central government’s stake can cost about Rs 46,400 crore ($6-6.5 billion). Gearing up for the competition, has already begun the process of raising $10 billion in the international market.

The government is yet to formally announce the names of that have put in EoIs for BPCL. Bids will be called once are shortlisted.

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