bp p.l.c., the ultimate holding company of Castrol India Limited, has entered into an agreement to sell 65% of its shareholding in Castrol to Stonepeak at an enterprise value of $10 billion. This strategic move is part of bp’s broader $20 billion divestment programme aimed at simplifying its portfolio, strengthening the balance sheet, and focusing on its downstream businesses.

The transaction is expected to generate net proceeds of approximately $6 billion, including accelerated dividend payments. These funds will be fully utilised to reduce bp’s net debt, supporting the company’s financial stability and strategic reset. The deal underscores Castrol’s strong business fundamentals and future growth potential, reflecting an implied EV / LTM EBITDA multiple of 8.6x.

Under the agreement, a new joint venture will be formed, comprising 65% ownership by Stonepeak and 35% by bp. bp’s retained stake allows it to participate in Castrol’s growth plan while maintaining optionality to realise further value in the future, following a two-year lock-up period. The transaction also provides Stonepeak with control over Castrol operations, with bp retaining two board seats in the newly incorporated joint venture.

The sale of a majority stake in Castrol marks a milestone in bp’s reset strategy, which includes reducing complexity, strengthening cash flow, and focusing on core integrated downstream businesses. The divestment forms part of the strategy to achieve a net debt reduction target of $14–18 billion by the end of 2027, following the reported net debt of $26.1 billion as of 3Q 2025.

Castrol’s established legacy spans 126 years, with a strong market position and a portfolio of differentiated products critical to vehicles, machinery, and industrial processes. Stonepeak’s investment reflects confidence in the long-term potential and brand value of Castrol, alongside bp’s continued guidance as a minority shareholder. The transaction is expected to complete by the end of 2026, subject to regulatory approvals.

For investors, this agreement presents an opportunity to observe strategic corporate restructuring by a global energy leader, with bp using the proceeds to strengthen its balance sheet and focus on high-value businesses. bp’s retained 35% stake ensures ongoing exposure to Castrol’s growth trajectory, including strong earnings performance over the last nine consecutive quarters.

The transaction also highlights bp’s commitment to shareholder value creation, with the divestment forming part of a broader $20 billion divestment programme, over half of which has now been completed or announced. The proceeds will enhance financial flexibility, reduce debt, and optimize bp’s capital allocation strategy, providing resources for future growth initiatives.

Stonepeak, a leading alternative investment firm with approximately $80 billion of assets under management, specializes in infrastructure and real assets. Its investment in Castrol is aligned with a long-term growth strategy, leveraging operational support and strategic guidance to maximize returns while protecting downside risk.

In conclusion, bp’s agreement to sell 65% shareholding in Castrol to Stonepeak for $10 billion marks a significant strategic development for both companies. It reinforces Castrol’s growth prospects, bp’s commitment to balance sheet optimization, and Stonepeak’s expansion into a globally recognized lubricants and energy business. This transaction exemplifies strategic corporate restructuring, investor-focused capital management, and long-term value creation in the Indian and global energy markets.

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