ONGC seeks access to data room to fix HPCL buy price

India's largest oil and gas producer has so far been given an information memorandum (IM) by government's transaction advisor which ONGC feels is not sufficient to arrive at a valuation of Hindustan Petroleum Corp Ltd (HPCL), sources privy to the development said.

ONGC, they said, wants to better understand HPCL's financials, particularly the investments it has committed in projects like a greenfield refinery at Barmer in Rajasthan, before it embarks on buying the government stake which at today's price is worth over Rs 32,600 crore.

Sources said ONGC wants to do a proper due diligence on HPCL and access to data room is a prerequisite for that.

HPCL already has a data room and will give access to the same to ONGC if the seller (government) so desires, a company official said. The official said the company has already shared information with government's transaction advisor and it is ready to share more if the need arises. Previously, the government was of the view that ONGC should arrive at a valuation of HPCL based on the publicly available information. The bulk of IM is made up of publicly available information.

Sources said ONGC wants a better fix at the kind of money it will need to invest in HPCL post acquisition and so wants access to data room.

The Cabinet on July 19 approved the sale of government's entire 51.11 per cent stake in HPCL to ONGC as part of its Rs 72,500 crore disinvestment target for the current fiscal, 2017-18.