Investment consortium formed between Trafigura, United Capital Partners and Essar to purchase a forty-nine percent stake in Essar Oil Ltd
15 October 2016 – Today an investment consortium comprised of international commodity trading firm Trafigura, private investment group United Capital Partners (UCP) and Essar have signed a Sale and Purchase Agreement for a 49 percent stake in Mumbai-based Essar Oil Limited from Essar Energy Holdings Limited.
Essar Oil Limited (EOL) owns India’s second largest private refinery and world-class storage and import/export facilities located near Vadinar city, as well as a domestic retail network business consisting of over 2,700 retail stations. The 20Mtpa super-refinery, with a Nelson complexity index of 11.8, is located on strategic shipping routes to demand centres in the Far East and close to Middle East sources of production, and within one of the world's most important sources of growth in energy demand.
Jeremy Weir, Chief Executive Officer of Trafigura commented: “This is an important and exciting investment for Trafigura with broad commercial benefits. Essar Oil occupies a strategic position in the global oil market. It owns world-class refining and infrastructure assets that will create multiple synergies with our trading business. Investing in Essar Oil also offers us a platform to extend our exposure to the growing domestic market in India.”
Ilya Sherbovich, Managing Partner of UCP, stated: “We are very pleased to reach an agreement to acquire shares of Essar Oil Limited. This is a top-tier asset operating in the promising Indian market, one of the largest and rapidly developing economies in the world. The announced transaction establishes a strategic partnership between our investment consortium members. Deal participants have extensive operational and financial expertise, which we believe will help to unlock significant value and provide strong financial results for all investors.”
The investment consortium stakeholders’ structure is Trafigura 49 percent, UCP 49 percent and Essar two percent. The transaction is supported by an efficient capital structure involving non-recourse bank finance and is fully compliant with international sanctions. The agreement, which is expected to close by the end of 2016, is subject to anti-trust and other regulatory clearances.
Essar Oil Limited has plans to expand its oil refining capacity and to build a petrochemical complex. The deregulation of pricing of the Indian retail market is expected to bring potential growth opportunities for the company’s retail network.
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Notes to editors
Founded in 1993, Trafigura is one of the largest physical commodities trading groups in the world. Trafigura sources, stores, transports and delivers a range of raw materials (including oil and refined products and metals and minerals) to clients around the world. The trading business is supported by industrial and financial assets, including 48.8 percent owned global oil products storage and distribution company Puma Energy; global terminals, warehousing and logistics operator Impala Terminals; Trafigura's Mining Group; 50 percent owned DT Group which specialises in logistics and trading; and Galena Asset Management. The Company is owned by over 600 of its almost 5,300 employees who work in offices in 37 countries around the world. Trafigura has achieved substantial growth over the last ten years, growing turnover from USD12 billion in 2003 to USD97.2 billion in 2015. The Group has been connecting its customers to the global economy for more than two decades, growing prosperity by advancing trade.
United Capital Partners
United Capital Partners (UCP) is an independent, private investment group established in 2006 to manage the assets of its partners and co-investors. UCP invests in high-potential private companies and in liquid securities traded on domestic and international markets. UCP has a successful investment track record in the following industries: FMCG and retail, financial infrastructure and services, internet technologies, high-tech materials production, heavy machinery, oil & gas and petrochemicals.