Rosneft Plans to Offload Nayara to Indian Giants: Who’s in the Race?

The Russian owners of India's Nayara Energy are looking to sell their stakes in the company and have held talks with several Indian conglomerates. According to a report by The Economic Times (ET), Nayara Energy’s largest stakeholder is Russian state-owned oil company Rosneft, which holds a 49.13% stake. However, Rosneft has been struggling to repatriate its earnings from India due to Western sanctions. The US and the European Union have restricted the company since 2014, following Russia’s invasion of Ukraine.

The remaining stakes in Nayara Energy are held by a consortium, Kesani Enterprises Co Ltd, which includes the Russian investment group United Capital Partners (UCP) and Italy's Mareterra Group. A small portion of shares is held by retail investors who bought them when the firm was publicly listed. The ET report also claims that UCP is looking to sell its 24.5% stake in the company.

Nayara’s Ownership Changes So Far

Formerly known as Essar Oil Limited, Nayara Energy was founded by brothers Shashi and Ravi Ruia in 1969, with the Essar Group as its promoter and Rosneft as a partner. Due to financial stress, Essar sold its majority stake to Rosneft and its partners in 2017 for $12.9 billion.

On January 11, 2023, Trafigura, one of Rosneft’s partners in the 2017 deal, sold its 24.5% indirect minority stake in Nayara Energy to Hara Capital Sarl, a wholly owned subsidiary of Mareterra Group Holding, effectively ending Trafigura’s involvement with Nayara.

The company voluntarily delisted from Indian stock exchanges in 2016 and later offered to buy back 25.9 million outstanding shares from minority shareholders at Rs 731 per share.

Nayara Energy operates India’s second-largest single-site refinery at Vadinar, Gujarat, with a capacity of 20 million metric tonnes per annum (mmtpa). It also has over 6,500 retail fuel stations across the country.

Race to Buy Nayara Energy

According to ET, including Mukesh Ambani-led Reliance Industries, Gautam Adani’s Adani Group, and Sajjan Jindal’s JSW Steel are potential buyers of Nayara Energy. However, Indian firms remain cautious due to concerns over low returns, high capital requirements, and geopolitical risks.

Rosneft and Indian companies have discussed a valuation of over $20 billion, while UCP is looking to sell its stake for over $5 billion. However, no deal or bidding process has been confirmed.