BP announced Thursday that it had sold an 11.5 percent share of Castrol India, leaving it with a 59.5 percent stake. The United Kingdom-based oil major is selling assets to raise cash but said it wants to retain control of the Indian lubricant supplier.
BP remains committed to India, and we wish to continue to grow our businesses here, progressing our upstream natural gas developments as well as our downstream opportunities, including lubricants, BP Group CEO Bob Dudley said.
In a press release BP said the stock shares that it sold were purchased by a range of investors in India and other countries. The company did not disclose the amount raised by the sale, but United States-based news website BidnessEtc reported the proceeds to be $300 million and said this amounted to a 5.3 percent discount from the stocks trading price the previous day.
Before the deal, 29 percent of Castrol India was held by a variety of investors.
BP emphasized that the sell-off of stock shares will not affect operations. There will be no impact from this financial transaction on staff or customers of Castrol India or on its existing contracts, the press release said.
Castrol India is the largest lubricant supplier in India, and the sale came with the company on an upward trend. Officials noted that its post-tax profit of Rs 615 crores (Rs 6.15 billion, or U.S. $95 million) was 30 percent higher than in 2014 and that performance for the first three months of 2016 remained on the same track, with post-tax profit of Rs 172 crores.
Castrol India has witnessed robust growth over the past years, a BP India spokesman, who asked not to be identified, told Lube Report Asia. The stake sale is not meant to mop up funds to finance other projects. BP has undertaken a strategic portfolio review to optimize the deployment of capital across different businesses. BP believes this option is a good opportunity to release capital whilst maintaining its commitment to our lubricant business in India and continuing to have strategic control of Castrol India Ltd.
Like other oil companies, BPs revenues have fallen with the drop in oil prices. In addition, BP faces bills for penalties it incurred over its massive 2010 oil spill into the Gulf of Mexico.