Mumbai, Sept. 24: Cairn Energy Plc, the Edinburgh-based company, is selling an 8 per cent stake in Cairn India Ltd through a transaction that will help it raise around $940 million (Rs 5,026 crore).
The stake sale is likely to be done through a block deal on the stock exchanges tomorrow. It will bring down Cairn Energy’s stake to 10.3 per cent. It is understood that the overseas oil and gas exploration and production company is selling around 15.3 crore shares of Cairn India at a price between Rs 318 and Rs 328 per share.
Cairn Energy has mandated Citigroup to complete the transaction.
Based on the closing price of the Cairn India share on the stock exchanges today, the price band is at a discount of up to 8 per cent. On the BSE, the Cairn India share closed lower at Rs 345.95, a drop of 1.23 per cent over last Friday’s close.
This will be the second such sale after Cairn Energy sold a significant portion of its stake in the Indian entity to Anil Agarwal-led Vedanta Resources in December 2011. The overseas company had then said that it would retain about a 22 per cent interest in Cairn India to give it “the strength and flexibility to explore new opportunities for delivering transformational growth”.
However, in June this year, Cairn Energy sold a 3.5 per cent stake in Cairn India Ltd for $360 million. Cairn UK Holdings had then sold around seven crore Cairn India shares through block deals on the bourses. The stake sale brought down its stake in Cairn India to 18.3 per cent.
It is believed that Cairn Energy is undertaking the stake sale to fund its overseas expansion plans. Recently, it had announced plans to explore crude oil off the coast of Morocco. The company has been looking at other regions as part of balancing its exploration portfolio after failing so far to strike oil and gas in Greenland. Cairn Energy has also bought Agora Oil & Gas AS and Nautical Petroleum Plc that gave it assets in the UK and the North Sea.
At present, the Vedanta group holds around 59 per cent in Cairn India. This stake is held through Twin Star Mauritius Holdings Ltd, Sesa Goa and Sesa Resources Ltd.
Cairn India recently announced plans to spend $2 billion over the next couple of years to raise output of crude oil and gas from the exploration blocks it operates in the country. Of this, around $600 million will be spent on its Rajasthan blocks. Crude oil production from these blocks have now touched 175,000 barrels of oil per day (bopd).