Cairn now faces allotment hitch

The allotment of Cairn India (CIL) shares could face a temporary roadblock. This follows the registrar to CIL’s recently concluded IPO, Intime Spectrum Registry (ISRL) being restrained by a court in Kolkata from signing any new contract or acting in furtherance of any contract after August 18, 2006.

CIL is expected to file its basis of allotment with the Registrar of Companies (RoC) on December 29, 2006 and make its debut in BSE in January. Cairn’s director, communications, David Nisbet said, “We are comfortable with this and believe that the issue would be sorted out in due course.”

Industry sources believe that ISRL is likely to file a petition in the Supreme Court seeking a stay on the courts order so that the process of share allotment of Cairn’s IPO may not be affected. Merchant bankers are of the view that this is more of a regulatory issue than a company issue.

Said an advisor to the IPO, “Cairn is not the only IPO handled by ISRL. There are over 30 issues handled by ISRL after August 18. The BLRMs were not aware of these developments. We are trying to workout the issue.”

The court order of December 21, 2006, comes in wake of a suit filed by MCS Ltd, a share registry firm, where MCS has alleged non-compliance of agreement by ISRL that it entered with MCS.

Cairn had raised $1.18 billion from its IPO, which closed on December 15, at a bottom end of its price band of Rs 160 per share. This was after a getting a very lukewarm response from the investors mainly because of concerns over valuation and upliftment of the crude in Rajasthan. With this the company will have a market capitalisation of $6.32 billion, instead of $7.5 billion (if the company is valued at upper end of price band at Rs 190 per share). Cairn will also have to return around Rs 350 crore to the private equity investors for pre-IPO placement done at Rs 176 per share.