India will not rush into selling the country’s second-biggest state refiner if it ends up with a lone suitor, according to the top bureaucrat overseeing asset sales.
“We need competitive bids, we can’t do it with a single bid,” Tuhin Kanta Pandey, secretary in the Department of Investment and Public Asset Management, said in an interview on the sale of Bharat Petroleum Corp. “In the expressions of interest, we have listed the people, multiple people. They must come in.”
So far three suitors — the Vedanta group, Apollo Global Management Inc. and I Squared Capital Advisors — have expressed interest in buying the government’s 53% stake in BPCL. But with a couple of them failing to rope in global investors amid waning interest in fossil fuels, only Vedanta appears to be left in the race with commodities tycoon Anil Agarwal showing willingness to spend about $12 billion for the deal.
The other suitors “have not yet indicated that they are walking out,” Secretary Pandey said. “So we have to hold on and let our transaction adviser keep persuading them,” he said.
While the government is keen to complete the sale, it doesn’t want to rush through with the process and prefers to hand it over to a consortium with stronger technical and financial prowess. The more time it takes to sell state assets such as BPCL, the longer the government’s fiscal deficit will stay wide open — indications of which appeared by way of a lower-than-usual disinvestment target in the annual budget.
The process hasn’t moved beyond due diligence that started in April last year. None of the bidders visited BPCL premises during the December quarter, Finance Director V.R.K. Gupta told analysts on Feb. 2, adding the privatization might not happen before March.
“BPCL is not off the table,” Pandey said. “The bidder response has weakened in terms of coming forward for bidding” given the “large ticket size.”
Meanwhile, the government is planning to invite bids for IDBI Bank Ltd. by March and the sale process could take as long as 12 months, Pandey said. He added that the government has discussed eligibility conditions with India’s central bank so that the bidders have some certainty on a banking license.