BP on Wednesday said it has agreed to sell a 65% stake in its Castrol unit to investment firm Stonepeak for about $6 billion. The deal values the business at $10.1 billion including debt. BP will retain a minority interest via a joint venture.
Consequently, Castrol India shares were trading 8% higher at Rs 201 apiece.
All proceeds from this transaction will be allocated to reducing net debt towards BP’s target of $14-18 billion by end 2027. As of the end of 3Q 2025 BP’s net debt was $26.1 billion.
The transaction includes minority interests in Castrol, principally in India (49% interest), Vietnam (35%), Saudi Arabia (50%), Thailand (40%) and other jurisdictions.
BP will appoint two Board seats to the new incorporated joint venture on closing.
Stonepeak said Cananda’s CPPIB will invest up to $1.05 billion as part of the deal. Castrol held 51% stake in Castrol India as of September-end, showed exchange data.
The deal accounts for a sizable chunk of BP’s plan to divest $20 billion of assets by the end of 2027. It’s shedding assets to turn around years of lagging performance that put the company in the crosshairs of activist shareholder Elliott Investment Management.
BP kicked off the sale process for Castrol back in February, when then-Chief Executive Officer Murray Auchincloss unveiled a strategic reset for the company. He promised to refocus on oil and gas, slash costs and reduce debt, but the plan was criticized by Elliott for not going far enough.
“The implied total equity value of Castrol is $8 billion after deducting JV minority interests totaling $1.8 billion, and other debt-like obligations of around $0.3 billion, and subject to customary adjustments. A significant proportion of Castrol JV minority interests relate to the shareholding in the publicly listed Castrol India Limited,” said BP in a press release.
Carol Howle, interim CEO at BP, said: “Today’s announcement is a very good outcome for all stakeholders. We concluded a thorough strategic review of Castrol, that generated extensive interest and resulted in the sale of a majority interest to Stonepeak. The transaction allows us to realise value for our shareholders, generating significant proceeds while continuing to benefit from Castrol’s strong growth momentum. And with this, we have now completed or announced over half of our targeted $20 billion divestment programme, with proceeds to significantly strengthen BP’s balance sheet.
“The sale marks an important milestone in the ongoing delivery of our reset strategy. We are reducing complexity, focusing the downstream on our leading integrated businesses, and accelerating delivery of our plan. And we are doing so with increasing intensity – with a continued focus on growing cash flow and returns, and delivering value for our shareholders.”
