INDIA BUSINESS WORLD - APRIL 2007
The Month that was ...

FOUR COS IN TALKS WITH GSPC TO BUY 40% IN ITS ARM

Four institutional investors are at an advanced stage of negotiations with the Gujarat State Petroleum Ltd (GSPC) for picking up a 40% stake in its subsidiary GSPC Gas Company at an estimated investment of over Rs 100 crore. ICICI Venture Funds Management, IDBI Capital, SIDBI and IDFC are currently negotiating with GSPC for picking up 3.2 crore equity shares at Rs 32 per share in GSPC Gas.

The investors are likely to pay a premium of Rs 22 per share on a share with face value of Rs 10. For about 3.2 crore shares, the total premium paid by the investors will be over Rs 66 crore. The four institutional investors are likely to pick up 40% stake in GSPC Gas while GSPC Group will hold the remaining 60% stake with 4.9 crore shares. "ICICI Venture is likely to pick up 1.2 crore equity shares while SIDBI will pick 1 crore shares in GSPC Gas," sources in the company said. The other two investors IDFC and IDBI Capital are in talks to pick up 80 lakh and 20 lakh shares each.

When contacted DJ Pandian, managing director, GSPC Ltd refused to confirm if the institutional investors would pick up any stake in GSPC Gas. "Currently discussions with the four investors are on and nothing has been finalized so far," he said. Simultaneously, the company has been in talks with various downstream oil and gas majors in the country to become a strategic partner in GSPC Gas Company. Sources in the company said that Bharat Petroleum Corporation Ltd, one of the players in the fray for strategic partnership may have an edge as they have offered a lucrative price and have an established relationship with GSPC. "GSPC may offer up to 20% to the strategic partner in GSPC Gas. However, the final shareholding will be clear in next one or two months," sources said.