Citigroup to acquire 10.5% in Jindal Drilling for Rs 156 cr
Citigroup is picking up a 10.47% stake in Jindal Drilling & Industries for Rs 156.3 crore through a preferential allotment. The drilling arm of the Rs 3,000-crore DP Jindal Group is engaged in the business of offshore oil & gas drilling in the country.
As per the deal, the company would issue 12 lakh shares at Rs 1,280 per share to Citigroup. This would be at a discount of 2.8% to Friday’s closing price of Rs 1361.85 on BSE. The stock has moved more than 17% over the past one month. The preferential allotment is subject to shareholders nod in the forthcoming EGM.
Early this week there were news reports about British Gas picking about 10% stake in Jindal Drilling. While the company management did not confirm the potential investor in the company, they acknowledged that they were going to induct an external investor which would bring down the promoters holding in the company to less than 75%.
As of September 30, 2007, promoters held 83.48% stake in the company. With the private placement to Citigroup, the promoters stake will come down to 74.74%. Jindal Drilling has a marketing collaboration with US-based Noble Drilling, the second largest drilling company in the world, for its Indian operations. For the half year ended September’07, its turnover is pegged at about Rs 200 crore.
The funds being raised through the equity placement would be used for capital expenditure and for other business expansions in the area of offshore and directional drilling and to consolidate the drilling businesses of the group.
The group which has presence in manufacturing of seamless pipes, ERW pipes, wind power generation, offshore oil and gas drilling and project exports, derives about 10-15% of its revenues from Jindal Drilling.
Its two biggest group companies are in the pipe manufacturing business: Maharashtra Seamless and Jindal Pipes. In addition to the drilling arm the group also has a couple of trading firms under its umbrella.
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