DUBAI A unit of Indian conglomerate Hinduja Group has hired Deutsche Bank (DBKGn.DE) to consider options for a 49 percent stake in a Saudi lubricants venture valued at up to $700 million, three sources said.
Jeddah-based Petromin is a joint venture between Gulf Oil International Group - a unit of family-owned Hinduja, and Saudi group Dabbagh with a 51 percent stake.
The partners have had differences over strategy, prompting Hinduja to hire an advisor and consider its options, the sources said on Tuesday, speaking on condition of anonymity as the matter has not been publicly disclosed.
A Hinduja spokesman in Mumbai declined to comment, as did Deutsche Bank. Petromin was not available to comment.
Any deal will most likely involve a third party buying out the Indian partner, one of the sources said, adding the business had an equity value of $600-$700 million.
"The business is good and it generates profit of around $200 million annually. The best option will be for a Saudi-based investor to come in and buy out the Indian group," one banking source said.
Petromin, the oldest lubricant company in the Middle East and formed by royal decree in 1968, makes more than 150 lubricant products and exports to over 35 countries in the Middle East, Africa and Asia, according to its website.
Dabbagh Group and Gulf Oil International Group paid $200 million to buy Petromin in 2007 from a joint venture between Saudi Aramco and Mobil Investments, an ExxonMobil (XOM.N) affiliate.
In 2010, Hinduja said it was planning a $1 billion initial public offering for Petromin and had hired Saudi British Bank (1060.SE) to run the process. Hinduja said at the time Petromin had production capacity of 300,000 metric tonnes for lubricants and greases combined. The IPO did not go ahead.
Hinduja's India-listed arm, Gulf Oil GFCL.NS, bought U.S. specialty chemicals company Houghton International HGINL.UL from a private equity fund for $1.05 billion earlier this month.
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.
(Editing by Dan Lalor)