Description

BP p.l.c. announces agreement to sell 65% stake in Castrol to Stonepeak at $10 billion enterprise value, retaining 35% stake in new joint venture. Transaction expected to complete by end of 2026.

Summary

Castrol India Limited informed BSE and NSE under Regulation 30 of SEBI (LODR) Regulations 2015 about a press release from BP p.l.c. (ultimate holding company). BP has reached an agreement to sell a 65% shareholding in Castrol to Stonepeak at an enterprise value of $10 billion. BP will retain a 35% stake in a new joint venture and receive total net proceeds of approximately $6 billion, which will be used to reduce net debt. The transaction is expected to complete by end of 2026, subject to regulatory approvals.

Key Points

  • BP p.l.c. agrees to sell 65% stake in Castrol to Stonepeak at enterprise value of $10 billion
  • Implied EV/LTM EBITDA multiple of approximately 8.6x
  • Total net proceeds to BP of approximately $6.0 billion, including $0.8 billion for pre-payment of future dividend income on retained 35% stake
  • Implied total equity value of Castrol is $8.0 billion after deducting JV minority interests ($1.8 billion) and other debt-like obligations ($0.3 billion)
  • Significant proportion of Castrol JV minority interests relate to shareholding in publicly listed Castrol India Limited
  • New joint venture will comprise 65% Stonepeak and 35% BP ownership
  • BP has optionality to sell its 35% stake following a two-year lock-up period
  • Castrol has demonstrated nine consecutive quarters of year-on-year earnings growth
  • Transaction accelerates BP’s reset strategy to strengthen balance sheet and focus downstream operations
  • All net proceeds will be utilized to reduce BP’s net debt

Regulatory Changes

No regulatory changes introduced by this circular. This is a disclosure pursuant to existing Regulation 30 of SEBI (LODR) Regulations 2015 regarding material information from the ultimate holding company.

Compliance Requirements

  • Castrol India Limited has fulfilled its disclosure obligation under Regulation 30 of SEBI (LODR) Regulations 2015 by informing stock exchanges about the press release from ultimate holding company BP p.l.c.
  • Transaction completion subject to obtaining regulatory approvals
  • Shareholders should note the change in ultimate ownership structure post-transaction completion

Important Dates

  • Press Release Date: December 24, 2025
  • Expected Transaction Completion: End of 2026 (subject to regulatory approvals)
  • Lock-up Period for BP’s Retained Stake: Two years from transaction completion

Impact Assessment

Market Impact: High - This is a significant corporate restructuring at the ultimate holding company level involving a $10 billion transaction. The creation of a new joint venture structure with Stonepeak acquiring majority control (65%) while BP retains 35% represents a fundamental change in Castrol’s ownership and governance structure.

Shareholder Impact: The announcement directly affects Castrol India Limited shareholders as a significant proportion of the $1.8 billion in JV minority interests mentioned relates to the publicly listed Castrol India Limited. The change in ultimate ownership may impact strategic direction, dividend policies, and long-term growth plans.

Operational Impact: Medium to High - While Castrol has demonstrated strong performance with nine consecutive quarters of earnings growth, the transition to joint venture structure with new majority owner Stonepeak may bring changes in management approach, investment priorities, and operational strategies.

Strategic Impact: The transaction reflects BP’s strategy to simplify its portfolio and strengthen its balance sheet by focusing on core downstream integrated businesses. For Castrol, partnering with Stonepeak (an infrastructure-focused investment firm) may provide different strategic opportunities and growth capital compared to being wholly owned by BP.

Timeline Uncertainty: The end-2026 completion timeline and regulatory approval requirements create a period of uncertainty that may affect stock price volatility and investor sentiment.

Impact Justification

Major corporate restructuring involving sale of 65% stake in Castrol by ultimate holding company BP to Stonepeak at $10 billion valuation. Significant change in shareholding structure and creation of new joint venture directly impacts Castrol India Limited shareholders.