ONGC To Borrow Rs 35,000 Crore From Seven Banks To Fund HPCL Acquisition
ONGC signs one-year loan pacts with seven banks to fund Rs 36,915-crore HPCL buyout.
State-owned Oil and Natural Gas Corporation Ltd. has signed loan agreements with seven lenders to finance its Rs 36,915-crore acquisition of Hindustan Petroleum Corporation Ltd. and create an integrated oil giant.
India’s largest bank State Bank of India Ltd. will lend Rs 7,340 crore to ONGC, according to a stock exchange filing today. The country’s largest and second-largest private lenders HDFC Bank Ltd. and ICICI Bank Ltd. also agreed to extend one-year loans of Rs 4,000 crore each. The government-run Export-Import Bank of India will provide $250 million, approximately Rs 1,600 crore, for a year, ONGC said.
The announcement came just a day after the oil explorer borrowed over Rs 18,000 crore from Punjab National Bank Ltd., Bank of India Ltd. and Axis Bank Ltd.
- Punjab National Bank: Rs 10,600 crore for one year.
- Bank of India: Rs 4,460 crore for one year.
- Axis Bank: Rs 3,000 crore for one year.
The cash-rich explorer is tapping the debt market for the first time to fund the purchase. ONGC's board had approved raising Rs 35,000 crore from the markets, according to Shashi Shanker, chairman and managing director of the explorer.
The government’s share sale is part of its plan to create a state-run oil behemoth to better compete with global rivals. The deal will also help it exceed its Rs 72,500-crore selloff target at a time when India has already exhausted its fiscal deficit limit in the first eight months of the year to March.
(Updates the number of banks ONGC has signed pacts with to raise money to fund the HPCL acquisition.)