Petronas picks 10% in Cairn India
Malaysian oil major Petronas has picked up about 10% in the post flotation share capital of Cairn India, as Cairn Plc raised $822 million (Rs 32bn) in its pre-IPO placement. The placement values the Cairn India business at about Rs 3.1 billion, or $6.92 billion.
A wholly-owned subsidiary of Petronas has subscribed to 176.53 million shares, emerging as the largest investor.
Cairn, which has about 90 percent of its value tied up in its Indian assets, placed 209.67 million Cairn India shares at a price of Rs 176.48 per share – if the flotation price is lower, the pre-placement price will be reduced accordingly.
In a statement, Petronas said it views its shareholding in Cairn India as a ‘long-term supportive investment and has no intention of increasing its stake in Cairn India.
As a result of the placing the net offer to the public of shares in Cairn India will be reduced from 538.47 million shares to 328.80 million shares, and the company can still hope to achieve its target of raising $1.8 bn.
The news that Cairn intends to cut the size of its public offering on the back of strong demand for the about 11.88 % of the issued share capital of Cairn India in the pre-placement, sent Cairn Energy plc stock up by various levels during the day, the biggest rise on the benchmark FTSE-100 index. The FTSE 100 index of leading shares edged higher in early trading on Thursday as commodities buoyed the market, with Cairn Energy topping the gainers.
In a statement, the company said that "The consequent implied valuation for Cairn plc’s current interest in Cairn India is US$ 6.32 billion after taking into account the proportion of the gross proceeds to be retained by Cairn India (expected to be approximately US$ 600 million)."
Sir Bill Gammell, Chief Executive of Cairn Energy PLC 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."
Shareholders on Nov. 17 approved selling shares in Cairn India Ltd. on the Bombay Stock Exchange and the National Stock Exchange of India in December, Cairn said in a Regulatory News Service statement
The largest investor in the placing is a wholly owned subsidiary of Petroliam Nasional Berhad (PETRONAS), which has subscribed for 176.53 million shares (representing approximately 10% of the post-flotation share capital). The balance of 33.14 million shares are being subscribed for by a combination of Indian and international institutional investors.
Oil explorer Cairn Energy Plc has raised $822 million (419 million pounds) in a pre-flotation placing of shares in its Indian operations, with Malaysian state oil company Petronas buying the bulk of the stock.
Cairn shares leapt 4.8 percent in early Thursday trading after the firm said strong demand for the placing meant it could cut the number of shares it would sell in the public offering on Indian stock markets and still raise its target of $1.8 billion.
Cairn, which has about 90 percent of its value tied up in its Indian assets, said it had placed 209.67 million shares at 176.48 rupees each, raising about 37 billion rupees, or $822 million.
Malaysian state oil company Petroliam Nasional Berhad (Petronas) bought 176.5 million of the shares, or about 10 percent of the expected share capital of Cairn India, Cairn said in a statement
At 8:10 a.m., Cairn shares were up 3.7 percent at 19.89 pounds, the biggest rise on the benchmark FTSE-100 index and valuing the business at about 3.1 billion pounds.
A spokeswoman said that because the pre-flotation placing had gone so well, Cairn was reducing the public offering of Cairn India shares to 328.8 million shares from 538.5 million.
The firm said the placing price implied a market value of around 311.5 billion rupees, or $6.92 billion, for Cairn India, and said it remained on track to complete the flotation in December.
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