BP sells 65% of Castrol to Stonepeak at $10 billion valuation

BP on Tuesday agreed to sell a 65% stake in Castrol to private equity firm Stonepeak at an enterprise value of $10 billion, as the energy major accelerates its divestment programme and sharpens focus on its downstream businesses.

The transaction implies an EV-to-LTM EBITDA multiple of about 8.6x, bp said in a statement.

The deal is expected to generate total net proceeds of around $6 billion for bp, including approximately $0.8 billion linked to the pre-payment of future dividend income over the short to medium term on bp’s retained 35% stake, along with other adjustments. The implied total equity value of Castrol is $8 billion, after deducting joint venture minority interests of $1.8 billion and other debt-like obligations of around $0.3 billion.

Following completion, a new joint venture will be formed with Stonepeak owning 65% and bp retaining 35%. BP said the retained stake will allow it to participate in Castrol’s growth over the coming years. After a two-year lock-up period, bp will have the option to sell its remaining 35% stake.

The transaction is expected to close by end-2026, subject to regulatory approvals.

“This transaction marks significant progress in our divestment programme,” said Carol Howle, interim CEO of bp. “We have now completed or announced over half of our targeted $20 billion divestment programme. We are reducing complexity, focusing the downstream on our leading integrated businesses, and accelerating delivery of our plan.”

The sale forms part of bp’s previously announced $20 billion divestment plan, taking total completed and announced proceeds to around $11 billion. All proceeds from the Castrol transaction will be used to reduce net debt, as bp targets a $14–18 billion net debt level by end-2027.

As of the end of the third quarter of 2025, bp’s net debt stood at $26.1 billion. The company expects divestment proceeds of more than $4 billion in 2025, of which $1.7 billion had been received as of Q3 2025.

The transaction includes minority interests in Castrol, notably in India (49%), Vietnam (35%), Saudi Arabia (50%), Thailand (40%), and other markets. BP said it will appoint two board members to the newly incorporated joint venture upon closing.

Post-completion, bp expects to treat its retained stake in Castrol as an equity-accounted investment and does not anticipate recognising earnings or receiving dividends in the short to medium term. Castrol’s non-controlling interests have contributed an average of around $100 million in net income annually since 2019, bp said.