ONGC, HPCL buy out bankers in Petronet MHB for Rs 371 cr

New Delhi: State-owned Oil and Natural Gas Corp (ONGC) and its subsidiary Hindustan Petroleum Corp Ltd (HPCL) have bought out lenders in Petronet MHB Ltd, the firm that owns a petroleum product pipeline in Mangalore, for about Rs 371 crore.

A consortium of eight public sector banks held 34.56 per cent stake in Petronet MHB Ltd, where ONGC and HPCL held 32.72 per cent apiece.

ONGC and HPCL bought 17.28 per cent stake each from lenders, the firms said in separate but almost identical regulatory filings.

The two firms paid Rs 185.38 crore each for acquiring 17.28 per cent more share in Petronet MHB Ltd. They now hold 49.99 per cent each in the company that transports petroleum products from Mangalore Refinery.

Mangalore Refinery and Petrochemicals Ltd (MRPL) is also a subsidiary of ONGC. MRPL uses the pipeline of Petronet MHB for moving fuel.

In a regulatory filing, ONGC and HPCL said Petronet MHB Ltd had a net worth of Rs 796.30 crore as of March 31, 2019.

“The acquisition will open up possible opportunities for synergy, better cost economics and revenue maximisation,” they said, adding that no governmental or regulatory approvals are required for the acquisition.

The acquisition is expected to be completed by March 31.

“The company has entered into a share purchase agreement dated February 27, 2020, with consortium of 8 nationalised banks, which hold equity shares in Petronet MHB Ltd, for acquisition of 9.48 crore equity shares aggregating to 17.28 per cent of the paid-up equity share capital at a price of Rs 19.55 per share,” HPCL said.

ONGC also posted a similarly worded filing shortly after HPCL disclosure.

“Post-acquisition the shareholding of HPCL in Petronet MHB will be about 49.996 per cent,” HPCL added. ONGC said it holds 49.996 per cent stake in Petronet MHB after the acquisition.

Petronet MHB Ltd was incorporated on July 31, 1998, on a common carrier principle to provide petroleum product transportation facility from Mangalore refinery to the oil marketing company terminals at Hassan and Devangonthi (Bangalore).

ONGC owns 51.11 per cent stake in HPCL.

Petronet MHB had revenue from operation of Rs 128.33 crore in 2016-17, which rose to Rs 130.89 crore in 2017-18 and Rs 158.44 crore in the following year.

In a separate filing, Bank of Baroda said it sold its 4.90 per cent stake in Petronet MHB for Rs 52.56 crore.

SBI in October 2019 had approved divestment of entire equity stake of 9.12 per cent held in Petronet MHB Ltd (PMHBL).

“The share purchase agreement has been duly executed between the parties to the transaction on February 27, 2020, for a cash consideration at Rs 19.55 per equity share,” SBI said in another regulatory filing.

SBI held 9.12 per cent in PMHBL equivalent to 5,00,62,640 equity shares.

Allahabad Bank said it divested its 3.26 per cent stake (1,78,87,247 shares) at Rs 19.55 apiece for a cash consideration of Rs 34.97 crore.

While, Canara Bank sold 3.25 per cent stake (1,78,73,652 equity shares) at Rs 19.55 a share, translating into Rs 34.94 crore.