Bangalore: Gujarat State Petroleum Corp. Ltd, or GSPC, plans to sell a 5% stake to a private equity (PE) firm by October, and will take a call on its stalled initial public offering (IPO) after this deal is finalized, two persons briefed on the matter said.
Gujarat’s state-run oil and gas exploration firm is awaiting approval from the Directorate General of Hydrocarbons (DGH), India’s reserve certifying authority, for a field development plan it submitted in June for developing its Krishna-Godavari gas field, Deendayal block, off the coast of Andhra Pradesh.
In mid-2005, GSPC had announced its biggest ever discovery of natural gas from the basin, which it says holds at least 1.4 trillion cu. ft (tcf) of in-place reserves and a maximum of 5.6 tcf reserves.
Terminal business: GSPC has started work on building a Rs3,500 crore, 5 million tonnes per annum liquefied natural gas import terminal at Mundra port in Gujarat. GSPC has a 50% stake in the venture. Ashesh Shah / Mint
GSPC has mandated SBI Capital Markets Ltd to identify a PE firm for its 5% stake sale.
“GSPC has been in talks with several private equity firms for the past two months for the stake sale and hopes to conclude the deal by September/October,” one of the two persons said. “GSPC will take a call on the planned IPO only after the private equity placement is concluded.”
The two persons briefed on the matter did not want to be named because the discussions are confidential.
Mint could not ascertain the likely valuation or how much money the stake sale would fetch.
A spokesman for GSPC declined to comment on the proposed stake sale when contacted by phone.
SBI Caps could not be reached for comment.
Last year, the firm raised a five-year loan of about $300 million (Rs1,467 crore) through external commercial borrowings (ECB) from a consortium of six banks led by State Bank of India, the country’s largest lender, to fund its exploration activities.
The firm also made an attempt last year to launch an IPO but had to shelve the plan due to bad market conditions. GSPC had even shortlisted five investment banks to manage the IPO.
“The IPO filed, that was closed last year following the market collapse, is now being opened by the Gujarat government for discussions,” the person mentioned earlier said.
In 2006, GSPC had invited bids from international hydrocarbon players for selling off as much as a 30% stake in its offshore production block at the KG basin. That plan was also called off in 2008.
Meanwhile, GSPC has started work on building a Rs3,500 crore, 5 million tonnes per annum liquefied natural gas (LNG) import terminal at Mundra port in Gujarat, a GSPC executive said.
GSPC has a 50% stake in the venture. The Adani Group holds a 25% equity and “the balance 25% stake in the LNG terminal project will be sold to a strategic partner. That is the aim”, the executive said, asking not to be named. “The GSPC-Adani venture will buy LNG from overseas suppliers.”
The firm has mandated Belgium engineering and project management consultancy firm Tractebel Engineering to undertake the front-end engineering design for the LNG terminal, which is slated to become operational by the end of 2013. Tractebel Engineering is a part of GDF SUEZ Energy Services (GSES), one of the four business lines of the GDF SUEZ group.
Another LNG import terminal project that GSPC was planning to construct along with the Essar Group at Pipavav port in Gujarat is not being pursued for now, the GSPC executive said. “Practically, it is not possible to do two LNG import terminal projects of similar size at the same time.”