Friday, 15 April 2011

Petronas keen to shed stake

Petronas, the Malaysian oil and gas explorer, is reportedly looking to sell its 14.91 per cent stake in Cairn India and exit the company.

The market has been abuzz with talks of Petronas’ exit from Cairn India even as market regulator Sebi has cleared the open offer from Sesa Goa — a Vedanta group entity — which will commence on April 11. Sesa is offering to buy the shares from Cairn India’s minority shareholders at Rs 335 per share.

The Malaysian state-owned company now holds over 28.34 crore shares in Cairn India which were acquired in different stages. This shareholding is held via Petronas International Corporation Ltd.

Petronas first acquired a little under 10 per cent in Cairn India through a pre-IPO placement in 2006.

Later in 2008, Petronas bought 6.33 crore shares of Cairn India at a price of Rs 224.30 apiece through a private placement, taking its stake in the latter to 12.7 per cent.

In the following year, the Malaysian oil major bought additional 4.36 crore shares from Cairn UK Holdings Ltd, the parent of Cairn India, taking its total holding to just under 15 per cent.

The buzz in the market is that the Malaysian company may not tender its shares in the open offer where the price is at a discount to the current market price.

Instead it is believed that Petronas may sell its stake in the open market to institutional investors. This, however, could not be confirmed from Petronas.

Talks that Petronas may exit Cairn India have been rife since last year when Vedanta Resources and Cairn Plc announced the $9.6-billion deal that will give Anil Agarwal of the Vedanta group a majority stake in Cairn India.

The talk that Petronas may sell its stake impacted the Cairn India stock that declined 3.87 per cent, or Rs 14.15, to end at Rs 351.10. Thus, at the current market price, the total stake held by Petronas is valued at Rs 9,950 crore. Petronas had to shell out a little over $1 billion to acquire this stake in Cairn India.

In a filing with the stock exchanges today, Sesa Goa said: “The acquisition of 51-60 per cent of Cairn India by the Vedanta group remains conditional on receipt of the Government of India’s consent.” -