UK’s Cairn Energy has sold additional 3.5 per cent stake in its former Indian arm Cairn India for Rs 2,060 crore ($365 million) through open market on Friday. The British energy firm has been looking to encash more from its key asset in India as it pools in resources to bankroll other inorganic expansions around the world.
Over the past three months, the British firm has announced two deals worth over $1 billion cumulatively. These include a deal to acquire Nautical Petroleum for $644 million and another to acquire Agora Oil & Gas for $450 million.
Cairn Energy had earlier sold around 40 per cent stake of Cairn India to Vedanta in tranches, starting with 10 per cent holding in July 2011 for approximately $1.4 billion in cash. Last December, it sold another 30 per cent stake to Vedanta for $4.1 billion. Cairn Energy had earlier planned to distribute the bulk of stake sale proceeds to its shareholders.
The British company still owns around 18.3 per cent stake in the Indian firm which is now majority-owned by the Vedanta Group. The stake is now worth Rs 10,727 crore or $1.9 billion.
“Our remaining 22 per cent shareholding in Cairn India, retained cash and balance sheet strength provide financial flexibility and an excellent platform for future growth opportunities,” said Simon Thomson, chief executive of Cairn Energy, in December last year.
Cairn India scrip crashed 6.11 per cent to close at Rs 307.5 a share on the BSE in a strong Mumbai market on Friday.
London Stock Exchange-listed Vedanta Resources completed the deal for purchasing majority stake in Cairn India in a transaction announced in late 2011, in a deal worth around $8.67 billion. This included share purchase through open offer and block deals from the UK-listed parent company Cairn Energy Plc.
The Vedanta group now holds around 59 per cent stake in Cairn India, of which 20 per cent is held by Vedanta Resources subsidiary Sesa Goa Ltd.
The deal faced several regulatory hurdles though, related to royalty payments to the Indian government due to Cairn India’s partnership with the State-controlled ONGC in its key assets in India. Moreover, the environmental issues related to the mining operations of the Vedanta Group and its lack of business expertise in the oil & gas sector also came under fire.
In April 2010, Vedanta Resources Plc., through Sesa Goa, had acquired 10.4 per cent stake for $1.48 billion from Petroliam Nasional Berhad. It also picked up additional 8.1 per cent for $1.24 billion via the open offer.
(Edited by Sanghamitra Mandal)