SEPC Ltd. saw its shares rise over 5% on Wednesday following an announcement that its board has approved a strategic restructuring of its wholly-owned UAE subsidiary, SEPC FZE, Sharjah. This pivotal move is aimed at facilitating SEPC's entry into the lucrative UAE petroleum trading business.
As part of the restructuring, SEPC FZE's existing share capital, initially one share valued at AED 150,000, will be subdivided into 1,500 shares, each valued at AED 100. Additionally, 38,500 new shares will be issued through the capitalization of reserves, creating a total equity pool of 40,000 shares within SEPC FZE.
Acquisition of Wintality Petroleum FZE
A key component of this expansion strategy is the acquisition of Wintality Petroleum FZE, a UAE-based entity specializing in the import, export, and global trading of refined petroleum products. SEPC will acquire 100% of Wintality Petroleum FZE through a non-cash share swap, making it a step-down subsidiary of SEPC Ltd. post-completion.
Out of SEPC FZE's enlarged equity pool, 1,700 shares (representing 4.25%) are earmarked as non-cash consideration for this share swap. The remaining 38,300 shares will be issued to SEPC Ltd. as fully paid-up shares via capitalization of reserves, ensuring the parent company retains a substantial 95.75% stake in SEPC FZE.
Strategic Benefits and Outlook
Venkataramani Jaiganesh, Managing Director of SEPC Ltd., commented on the development, highlighting the capital-efficient nature of the transaction. He stated, “This structure allows us to build scale in the UAE using value already created within our own subsidiary. We acquire a full operating platform in refined petroleum trading, retain 95.75 per cent ownership of our Sharjah arm, and do so without any cash outflow from the parent company. It is a capital-efficient step towards broadening SEPC’s international footprint beyond project execution.”
The company confirmed that this transaction does not trigger Section 188 of the Companies Act, 2013, or Regulation 23 of SEBI LODR. Furthermore, neither Wintality Petroleum nor its promoters are related to any promoter, director, or key managerial personnel of SEPC Ltd. or SEPC FZE, ensuring an arm's length transaction.