Gautam Adani is said to be in talks with two private equity firms for a potential partnership to enter the race to buy state-run oil refiner and marketing company Bharat Petroleum Corporation Ltd (BPCL), sources said.

The Adani Group is understood to be negotiating with Apollo Global Management Inc and I Squared Capital; the two private equity firms are separately doing a due diligence for BPCL, one of the sources said.

Major deal

The two bidders have been scouting for partners to share the risks given the huge deal size, estimated at $12-13 billion. But a global shift towards renewable energy to combat climate change concerns has made the task of finding partners difficult.

Qualified bidders for BPCL can change and/or bring in new partners before placing the financial bid, according to the sale terms stipulated by the Department of Investment and Public Asset Management.

Adani’s move is seen as an afterthought as the billionaire stayed away from putting in an EoI (expression of interest) for BPCL when the deadline ended in November last year.

The energy clash

A few months down the line, though, the scenario has changed dramatically with Adani and Reliance Industries Ltd’s Mukesh Ambani engaged in a clash over green energy related businesses.

In June, Mukesh Ambani announced that Reliance Industries would make a massive ₹75,000-crore investment in a green energy giga complex in Jamnagar, Gujarat.

On July 30, Adani responded by setting up Adani Petrochemicals Ltd to “carry on the business of setting up refineries, petrochemicals complexes, speciality chemical units, hydrogen and related chemicals plants and other such similar units,” Adani Enterprises Ltd, the Ahmedabad-based conglomerate’s flagship company said in a regulatory filing, without offering any details.

Oil industry sources said that Adani’s foray into petrochemicals business lacked vision without a refinery in its fold.

In the refining business, the availability of petrochemicals in the product portfolio hedges against a drop in price/demand of fuels. Besides, integration of refining and petrochemicals leads to better profit margins.

BPCL, hence, would fit well into Adani’s petrochemical ambitions without impacting the Group’s sustainability goals.

However, there is no certainty that a partnership will fructify, and the talks could collapse, said one source. Adani Group and I Squared Capital did not respond to emails seeking comments. Apollo Global Management said it has “no comments” to offer.

Disinvestment plan

The government has decided to privatise BPCL by selling its 52.98 per cent stake to a strategic buyer. BPCL runs refineries in Mumbai, Kochi and Bina (in Madhya Pradesh) and is India’s No 2 oil marketing company and third largest by refining capacity.

Anil Agarwal-led resources giant Vedanta Ltd is the third contender for BPCL.