SBI Caps looking for Sabarmati Gas strategic partner

Vol 11, PW 25 (01 May 08) Midstream & Downstream

Investment banker SBI Caps is continuing its search for a strategic partner to take a 50% stake in Gujarat-based gas retailer Sabarmati Gas, jointly owned by Bharat Petroleum and GSPC.

PETROWATCH understands Sabarmati Gas, which sells CNG and piped gas in the north Gujarat districts of Mehsana, Gandhinagar, and Sabarkantha, would ideally like to join hands with a private sector company or institution. GSPC and Bharat Petroleum each hold 25% stake in the joint venture and are offering the remaining 50% to an outside party.

“Sabarmati Gas appointed SBI Caps in February,â€‌ confirms a source in. “But it is yet to formally launch the process of equity sale.

â€‌ That, we are told, will happen after the company finalises a Term Sheet and Information Memorandum following a board meeting likely to be held this month. “The Term Sheet will have full details of the company: its background, equity structure and other details,â€‌ adds a source.

“It will also detail the terms and conditions for potential investors such as nomination of directors on the board. For now the Term Sheet is at the draft stage.

â€‌ SBI Caps is targeting only private companies so that ownership of Sabarmati Gas by government â€کpromoted’ companies remains at 50% or less. “SBI will talk to financial institutions like IL&FS,â€‌ we hear.

“Private equity funds will also be approached.â€‌ SBI Caps is already talking to two companies, whose identity remains a mystery, except that they both have a â€کproven gas source.

’ In north Gujarat Sabarmati Gas continues to consolidate its presence, registering phenomenal growth of 50% in CNG sales over the last three months. In February, it was selling 15,000-kg/day from three â€کmother’ CNG stations in Gandhinagar, Himmatnagar and Mehsana.

Today it sells close to 22,000-kg/day. In March it commissioned two new â€کmother’ CNG stations at Kadi and Kalol.

All four stations belonging to Sabarmati Gas are located at BPCL petrol pumps, except its CNG station at Gandhinagar, which is at the local bus depot.