ICICI Bank, Axis Bank, SBI gain up to 7% on Essar-Rosneft deal

Shares of ICICI Bank, Axis Bank and SBI, three of the biggest lenders to Essar Group, rallied up to 7 per cent intraday after the debt-laden company confirmed it has agreed to sell an oil unit to a consortium led by Russia's Rosneft.

The stock of the ICICI Bank rose over 7 per cent, Axis Bank added 2.54 per cent, while SBI gained 1.74 per cent on the BSE. The three stocks were the top three gainers on Sensex and Nifty both in the morning trade.

"...such a large deleveraging would be positive for Essar Group lenders," Nomura said in a note ahead of the deal announcement

"Exposure to Essar Group expressed as a per cent of respective bank's loan book is highest for ICICI Bank, Axis Bank, PNB and SBI," the foreign brokerage added.

Rosneft bought a 49 per cent stake in Essar Oil's refinery, port and petrol pumps, while Netherlands-based Trafigura Group Pte, one of the world's biggest commodity trading companies, and Russian investment fund United Capital Partners split another 49 per cent equity equally. The remaining 2 per cent will be held by minority shareholders after delisting of Essar Oil.

The deal has an enterprise value of close to $12.9 billion - $10.9 billion being for a 20 million tons a year refinery in Gujarat and over 2,700 petrol pumps and another $2 billion for Vadinar port in Gujarat. The deal factors in Essar Oil's debt of about $4.5 billion and about $2 billion debt with the port company.

Also, the near $3 billion dues to Iran for past oil purchases will continue to be on Essar Oil books. Trafigura, which has been funded by Russian bank, may sell its stake to Rosneft at a later date.