The Hindu Business Line : Strategic partner for Prize Petroleum likely by March

Snapshot
Essar Oil, Larsen & Toubro, Jaiprakash Associates, and the LN Mittal Group are undertaking due diligence.
ICICI Bank has appointed Deloitte Touche Tohmatsu on behalf of the FIs to manage the data room for due diligence.

Our Bureau

New Delhi, Jan. 23 Prize Petroleum, a joint venture between Hindustan Petroleum Corporation Ltd (HPCL) and financial institutions, may get a strategic partner in the company by March. “The whole exercise will be completed in two months,” Mr Arun Balakrishnan, Chairman and Managing Director, HPCL, said.

Speaking to Business Line he said: “Essar Oil, Larsen & Toubro, Jaiprakash Associates, and the LN Mittal Group are currently undertaking due diligence.”

Prize Petroleum plans to come out with a rights issue for expanding its equity base.

HPCL holds 50 per cent stake in Prize Petroleum, while ICICI Bank and ICICI Ventures hold 45 per cent, and Housing Development Finance Corporation holds 5 per cent. While the new strategic partner will acquire stake from the two financial institutions, HPCL will retain its entire holding in the joint venture.

Mr Balakrishnan said: “we have requested the financial institutions not to exit fully. They may relinquish some share from their existing stake holding. It now depends on them, how much they want to.”

Global consultant

ICICI Bank has appointed global consultant Deloitte Touche Tohmatsu on behalf of the financial institutions to manage the data room for due diligence. The final call on roping in the partners would be taken by ICICI.

Prize has a paid-up equity of only Rs 20 crore and its authorised capital is about Rs 720 crore.

The company operates ONGC’s marginal fields in Cluster-7 near Mumbai High. It also operates marginal fields of ONGC at Hirapur, West Bechraji, Khambel. Prize has acquired 50 per cent share in Sanganpur oil field under the production sharing contract and one block in the sixth round of New Exploration Licensing Policy (NELP).

“We’ll make the business plan from Prize Petroleum, whether to go overseas or indigenous, once the new partner comes in,” he said.

Mr Balakrishnan, however, said Prize Petroleum will remain a separate entity and HPCL will not transfer its upstream assets to the joint venture.

Prize wants to increase its equity base in order to fund its increased activities in oil exploration and production.

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