ONGC Videsh plans to raise $700 million from overseas investors

The company plans to retire old loans

ONGC Videsh (OVL) is planning to raise $700 million from overseas investors as syndicated loans in its efforts to take advantage of the falling interest rates in the international markets and retire its old loans.
 
The company has requested banks to send in their proposals for participating in the offer, which includes a $200-million greenshoe option. OVL expects several banks to join the offering — considering the investor demand for its previous offers. The syndicated loan is expected to be priced at around 100 basis points over the Libor rate, said a banker close to the transaction.
 
“There is good demand for well-rated companies from India and OVL is taking advantage of the rates, which are down significantly since January,” said a banker. The company had raised a similar sized loan in March, the banker said.
 
OVL, is the investment arm of India’s oil and gas major ONGC, and has invested in several fields across the world. OVL has been looking to rationalise its existing debt.
 
According to credit rating agency ICRA: “Over the years, OVL has been acquiring participating interests in overseas oil and gas assets and participates either directly or through wholly-owned subsidiaries/joint venture companies in 37 projects in 17 countries, of which 14 are producing properties.”

“However, the top three investments (Mozambique, Russia, and Brazil) drove the bulk of investments. OVL’s total oil and oil equivalent gas production stood at 14.98 million tonnes of oil equivalent (MMTOE) in financial year 2019-20 against 14.83 MMTOE in FY21,” ICRA added.
 
OVL’s revenue during the first quarter of financial year 2021-22 (Q1FY22) stood at Rs 4,075 crore, up from Rs 2,396 crore in the corresponding quarter last year. Profit after tax stood at Rs 915 crore in Q1, up from a loss of Rs 334 crore the previous year. Operating costs rose to Rs 1,473 crore in Q1, up from Rs 1,116 crore the previous year. 
 
(With inputs from Twesh Mishra)