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Petronas acquires 10 pc stake in Cairn India

In the largest IPO-related pvt placement, Cairn Energy has raised Rs 3,700 cr from Petronas, reports Arun Kumar.

india Updated: Nov 23, 2006 19:48 IST
Arun Kumar

Showing a keen interest in the Indian exploration and production sector, Malaysian petroleum giant Petronas (Petro Nasional Berhad) has acquired a 10 per cent stake in Cairn India for Rs 3,115 crore ahead of the company's initial public offer (IPO) of shares that rides on its huge oil reserves in Rajasthan.

In the largest-ever private placement before the IPO, Cairn India, the local unit of London-listed UK oil explorer Cairn Energy plc, has raised Rs 3,700 crore or $822 million mainly from Petronas. The remaining Rs 585 crore has been raised from a combination of Indian and international institutional investors, company officials said.

Cairn Energy Plc's chief executive Bill Gammell said, "We are delighted to have gained such substantial backing for our pre-flotation placing. The positive response confirms our belief that this is the best strategy for Cairn to develop and grow our world class business in India."

Cairn India said in a statement that it has divested nearly 21 crore equity shares at Rs 176.48 per share. Of this ,17.6 crore shares (representing approximately 10 per cent of the post-flotation share capital) have been subscribed to by Petronas. However, in case the IPO price, which will be decided through book-building process, is lower than Rs 176.48 per share, the placement price will also be reduced accordingly.

At this price, Cairn India’s market capitalisation would be a whopping Rs 31,154 crore.

After the completion of its private placement, the IPO size would be reduced to around 32.88 crore shares as against the original plan of 53.88 crore shares. Through the proposed IPO, which will be completed before February 10, the company plans to raise another Rs 5,797 crore.

In all the company would raise Rs 9,500 crore.Out of this, Rs 2,700 crore will be retained by Cairn India while the balance will be paid to the parent company, Cairn Energy Plc, for acquiring its entire asset base in the India.

The private placement is equivalent to 11.88 per cent of the issued share capital of Cairn India. Merrill Lynch and ABN AMRO Rothschild have acted as joint co-ordinators in the placement.

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First Published: Nov 23, 2006 19:48 IST