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Thursday, November 23, 2006

Cairn placing raises $822 mln ahead of India IPO


UK oil explorer Cairn Energy Plc said on Thursday it had raised $822 million in a pre-flotation placing of shares in its Indian operations, with Malaysian state oil firm Petronas [PETR.UL] buying the bulk of the stock.

Cairn, which has about 90-percent of its value tied up in its Indian assets and is floating them on Indian stock markets, said it had placed 209.67 million shares at 176.48 rupees apiece, raising about 37 billion rupees, or $822 million.

Cairn said Malaysian state oil company Petroliam Nasional Berhad (Petronas) had bought 176.5 million of the shares, or about 10 percent of the expected share capital of Cairn India.

"This is the first public indication of support Cairn has had from industry, which is another tick in the box for shareholders; but in our opinion it makes a near-term takeover considerably less likely," Bridgewell Securities analyst Al Stanton wrote in a research note.

A spokeswoman said Cairn still expected to raise around $1.8 billion in total from the flotation but because the pre-flotation placing had gone so well, it was reducing the public offering of Cairn India shares to 328.8 million shares from 538.5 million.

Cairn said the placing price implied a market value of around 311.5 billion rupees, or $6.92 billion, for Cairn India.

The firm said it remained on track to complete the flotation in December.

Merrill Lynch and ABN Amro were joint co-ordinators of the placing.

Cairn shares closed at 19.18 pounds on Wednesday, valuing the business at about 3 billion pounds ($5.7 billion).