Sebi directs Essar Oil to match Rosneft's price for delisting

The capital markets regulator, Securities and Exchange Board of India (Sebi), has directed Essar Oil to match its delisting price with that being paid by Russian oil giant Rosneft for a 49 per cent stake in the company.

The regulator has also agreed to certain relaxations sought by the company for its delisting bid.

Rosneft is reportedly buying a 49 per cent stake in Essar Oil for $2.8 billion (Rs 18,500 crore), valuing the company at $5.7 bn (Rs 37,600 crore).

In comparison, Essar Oil’s market capitalisation on Friday was $4.1 bn (Rs 26,800 crore).

“The promoters have undertaken to pay the difference between the transaction price with Rosneft and the price discovered under the Delisting Regulations,” said Prashant Saran, wholetime member, Sebi, in an order on Friday.

Promoter holding at the end of the September quarter was 24.89 per cent. However, including Essar Oil’s $951-million global depository receipts, the holding works out to around 90 per cent.

By the Sebi order, the promoters will pay the price discovered in the reverse book building offer or Rosneft’s price, whichever is higher.

As for Sebi agreeing to certain exemptions in the delisting regulations sought by the promoters, these include a relaxation in strict enforcement of rule 10(1), where a company has to make a public announcement within one working day from the receipt of the in-principle approval from stock exchanges.

Sebi looked into the deal with Rosneft after getting some complaints over the agreement between the two oil companies.

“I note that the complaints apprehend that the interests of minority shareholders might be affected and they might be deprived of a possible better payout that the promoters may receive. However, the public shareholders have the benefit of both the reverse book building process available to them under the Delisting Regulations and any possible higher price paid by Roseneft to the promoters in terms of the undertaking given by the promoters,” Saran said in the order.

Essar Oil’s proposal to delist was approved by its shareholders in August 2014. The deal with Rosneft was announced in July this year.

Securities and Exchange Board of India ( SEBI )