M&A: SBI helps GSPC with more acquisitions

Vol 18, PW 13 (26 Feb 15) Midstream & Downstream

GSPC just keeps growing! Following its acquisition of Gujarat Gas the Gujarat-based pet company of Narendra Modi is trying to acquire Vadodara Gas (VGL) and Sabarmati Gas under its plan to become a monster-sized gas retailer, eventually listed on the Indian stock exchange.

In January GSPC appointed SBI Caps to advise it on swallowing up GAIL’s 25% in VGL and Bharat Petroleum’s 25% stake in Sabarmati Gas. “We’ve asked SBI Caps to work out a proposal,” confirms Gujarat energy minister Saurabh Patel.

“We’ll decide on the proposal after the Gujarat assembly budget session ends on March 31.” SBI Caps, which aims to submit its report end-March, must work out a price to pay to GAIL and BPCL.

Analysts estimate GSPC would need Rs300-Rs350cr ($48-$56m) for the acquisitions. “Does GSPC have the money?” questions a rival gas retailer, who answers his own question: “Gujarat’s government is always there to dole out money!" Meanwhile, on February 20 the Gujarat High Court heard GSPC’s petition for formal approval of its takeover of Gujarat Gas.

This means GSPC Gas, Gujarat Gas, Gujarat Gas Financial Services and Gujarat Gas Trading Company can all be amalgamated with newly-formed GSPC Distribution Networks to create India’s largest gas retailer with 7m cm/d gas sales. GSPC acquired BG’s 65.12% in Gujarat Gas on June 12, 2013 paying Rs2463.80cr ($399m).