BPCL picks I-Sec, HSBC, BNP Paribas & SBI Cap for Rs 18,000 crore rights issue

A rights issue is an offer to existing shareholders to buy additional new shares of the company.

Bharat Petroleum Corporation Ltd ( BPCL) has mandated four investment banks for its Rs 18,000 crore rights issue as the state-owned refiner moves towards achieving its sustainability goals, multiple industry sources familiar with the matter told Moneycontrol.

A rights issue is an offer to existing shareholders to buy additional new shares of the company.

" Following a selection process involving technical rounds and financial bids, ICICI Securities, HSBC Securities, BNP Paribas and SBI Capital have been shortlisted by BPCL as advisors for the deal," one of the persons above told Moneycontrol.

A second person confirmed the above names and added that BPCL's target is to launch the deal before September end 2023.

Both the persons above spoke to Moneycontrol on the condition of anonymity.

ICICI Securities declined to comment. Moneycontrol is awaiting responses to email queries sent to BPCL, HSBC Securities, BNP Paribas and SBI Capital and could not elicit an immediate comment. This story will be updated as soon as we hear from them.

In June, BPCL announced that it would consider various modalities for capital infusion including rights issue, for achieving energy transition, net zero and energy security objectives, subject to requisite approvals as required under applicable law. On 28 June, its board gave the nod for raising capital via the rights issue route.

"The detailed terms of rights issue including but not limited to the issue price, right entitlement, record date, timing, and terms of payment will be intimated separately after approval of the Board in due course," the firm said. It's stock price has risen by 11 percent in the last six months.

Budget 2023 had allocated Rs 30,000 crore for capital support to state-run Oil Marketing Companies (OMCs) like BPCL, IOCL and HPCL.

On July 7, the board of IOC also approved a capital raise via a rights issue not exceeding Rs 22,000 crores.

GREEN ENERGY PUSH BY OMC's

According to a July 5 report by Fitch Ratings, "Recent announcements of plans to raise equity capital by two of India’s top-three majority state-owned oil marketing companies (OMC) - Bharat Petroleum Corporation Limited (BPCL) and Indian Oil Corporation Ltd (IOC) - should strengthen their capex spending and the credibility of their emission-reduction plans, says Fitch Ratings."

" An injection of capital from the Indian government would provide further evidence for our assumption that the two companies would receive extraordinary sovereign support if needed, the key factor underpinning their ‘BBB-’/Stable ratings, "the report added.

As part of its energy-transition goals, BPCL is looking to expand its renewable power generation portfolio to 1GW by 2025 and 10GW by 2040, from 50MW currently. IOC is also looking to expand its renewable energy portfolio substantially from the current level of 238MW, and to install 10,000 electric vehicle charging stations in the next three years, from the 1,900 it has already.

In addition, both firms aim to reach an average 20% ethanol blend in their petrol across India by 2025, up from the 10% level that was achieved in June 2022, and to build green hydrogen plants, as per Fitch Ratings.