Castrol India: Stonepeak Launches ₹4,990 Crore Open Offer for 26% Stake

Introduction to the Acquisition

Motion JVCo Limited, in collaboration with investment firm Stonepeak and the Canada Pension Plan Investment Board (CPPIB), has initiated a mandatory open offer to acquire up to a 26% equity stake in Castrol India Ltd. The move, announced in a public filing with stock exchanges, follows a significant global transaction involving Castrol's parent company. This development has put the spotlight on the Indian subsidiary's ownership structure and future strategic direction. The offer price has been set at ₹194.04 per share, a slight premium over the stock's closing price before the announcement, signaling a calculated move by the acquirers to consolidate their position in the Indian market.

The Global Deal Triggering the Offer

The open offer in India was triggered by a larger strategic decision made by British Petroleum (BP). BP agreed to sell a 65% stake in its global lubricants business, Castrol, to Stonepeak. This transaction valued the entire Castrol enterprise at approximately $10.1 billion. For BP, the sale is expected to generate net proceeds of around $1 billion. The company has stated that these funds will be used to reduce its net debt, which stood at $16.1 billion at the end of the last reported quarter. This divestment is part of BP's broader strategy to streamline its operations, divest non-core assets, and focus on its primary oil and gas business. Upon completion, a new joint venture will be formed, with Stonepeak holding a 65% stake and BP retaining the remaining 35% for at least two years.

Open Offer Details and Regulatory Compliance

Under the regulations set by the Securities and Exchange Board of India (SEBI), an indirect acquisition of a significant stake in a parent company mandates an open offer to the public shareholders of its listed Indian subsidiary. The offer for Castrol India targets the acquisition of up to 25.71 crore equity shares, which constitutes 26% of the company's total share capital. The total consideration for the offer, if fully subscribed, would amount to approximately ₹4,990.16 crore. The offer is being managed by UBS Securities India.

Market Reaction and Shareholding Context

News of the impending change in ownership had a notable impact on Castrol India's stock performance. Ahead of the formal announcement, shares surged over 8% during intraday trading. The stock eventually closed at ₹189.30 on the National Stock Exchange, marking a gain of 1.81%. The offer price of ₹194.04 represents a premium of about 2.5% over this closing price. The current shareholding pattern of Castrol India is diversified. Prior to this transaction, Castrol Limited (the UK parent) held a 51% stake. Other significant institutional shareholders include Life Insurance Corporation of India (LIC) with a 10% stake and the Government of Singapore with 1.33%. Retail shareholders collectively hold about 16.6% of the company.

Strategic Logic for the New Investors

For Stonepeak, an investment firm focused on infrastructure and real assets, and its partner CPPIB, the acquisition of Castrol is a strategic move to gain control of a business with stable, defensive cash flows. The lubricants industry is considered resilient through economic cycles, as its products are essential for transportation and industrial machinery. Castrol's strong global brand, established distribution networks, and 126-year history provide a solid foundation. The new owners have also highlighted growth opportunities beyond traditional combustion engines, particularly in fluids for electric vehicles (EVs), coolants for data centers, and efficiency solutions for industrial applications. This aligns with the broader energy transition and digitalization trends.

What This Means for Castrol India Investors

Public shareholders of Castrol India are now faced with a decision: either tender their shares in the open offer or remain invested under the new ownership. The offer price provides a modest premium, suggesting the market had already factored in some of the company's value. If the open offer is successful, Stonepeak and its partners could secure a dominant majority stake, giving them greater control over the company's strategic direction, capital allocation, and dividend policies. The long-term outlook will depend on the new management's ability to accelerate growth in emerging sectors like EV fluids while maintaining the profitability of its core business.

Future Outlook and Timeline

The completion of the global transaction, and consequently the Indian open offer, is subject to regulatory approvals and is expected by the end of 2026. The new joint venture structure, with BP retaining a minority stake, ensures a degree of continuity, but the strategic leadership will shift to Stonepeak. For Castrol India, this transition could lead to accelerated product development and new partnerships, especially in India's rapidly growing mobility and industrial markets. The focus is expected to be on leveraging Castrol's brand to expand into high-growth areas aligned with energy transition and digital infrastructure.

Conclusion

The mandatory open offer for Castrol India is a direct consequence of BP's strategic decision to divest a majority stake in its global lubricants business. The entry of Stonepeak and CPPIB as new majority stakeholders marks a new chapter for the company. While the immediate focus is on the execution of the open offer, the long-term implications will revolve around the new owners' strategy to balance stable cash generation with investments in future growth areas like electric mobility and industrial solutions.