Hinduja to sell 49% stake in Petromin

Saudi-owned Dabbagh Group is in the advanced stages of buying out the Hinduja Group’s stake in Petromin, Reuters reported. Based in Jeddah, Saudi Arabia, Petromin is a joint venture between Hinduja’s Gulf Oil International Group (49%) and Dabbagh (51%).
Petromin, the oldest lubricant company in the Middle East, was formed by a royal decree in 1968. In 2007, the Dabbagh Group and Gulf Oil paid US$200 million to buy Petromin from a joint venture between Saudi Aramco and Mobil Investments, an ExxonMobil affiliate. It produces more than 150 lubricant products and exports to more than 35 countries in the Middle East, Africa and Asia. It has a production capacity of 300,000 metric tons of lubricating oils and greases.
The strategic differences over the business, which is valued at about US$700 million today, prompted Hinduja Group to hire Deutsche Bank last year to review its options. In 2010, Hinduja said it was planning a US$1 billion initial public offering (IPO) for Petromin and had hired Saudi British Bank for the IPO.
Dabbagh, which has interests in food, real estate and automobile services among others, is partly financing the purchase through debt.
The Hinduja Group, which has interests across banking, media, power and automobiles in India, has a sizeable presence in the Gulf, including Hinduja Bank in Dubai.
The deal highlights the challenges faced by international investors in the largest Gulf Arab economy where relationships with influential local partners and government can determine the eventual fate of businesses.
Another Saudi family conglomerate, Alhamrani Group, was considering the sale of its approximately two-thirds stake in a lubricant joint venture with Germany’s Fuchs Petrolub , Reuters reported last May.