ICICI Bank shares jump over 6% on Essar Oil stake sale deal with Rosneft

The shares of ICICI Bank surged over 6% on Monday after Essar Oil on Saturday agreed to a deal with Russia's Rosneft PJSC and a consortium of Trafigura and United Capital Partners, to sell 98% for about $11 billion (nearly Rs 72,800 crore). ICICI Bank has a significant exposure to the Essar Group. 

At 1222 hours, the shares of the bank were trading at Rs 256.60 per piece, up 6.10%, or Rs 14.75 BSE. 

The Essar Group has a total debt of Rs 90,000 crore. With the stake sell, ICICI Bank, along with Punjab National Bank, State Bank of India and Axis Bank will be benefitted as the company will be able to repay these banks.

"This sale could help heavily-indebted Essar Group cut down its debt, analysts say. Currently, Essar Group has Rs 1.2 trillion of debt ($17.8 billion): Essar Oil has Rs 300 billion of debt; Essar Steel, Rs 440 billion; Essar Power, Rs 200 billion; Essar Group Fund, another 235 billion", Nomura Securities said.

Essar Group`s chief executive, Prashant Ruia, told Reuters, "Essar is working closely with the banks to work out a restructuring plan and some of the funds raised via the sale of Essar Oil would go into restructuring the operations of Essar Steel."

Reportedly, in the all-cash deal, it also includes Vadinar refinery and Vadinar Port in Gujarat. 

Debt-laden Essar Steel, which owns a 10 million tonne steel plant in the western state Gujarat, carries debt of over $5 billion and had been seeking to restructure its debt, a Reuters report said.