Private equity firm major Carlyle Group has committed $500 million in Magna Energy Ltd, a South Asia-focused energy company floated by former Cairn Energy Plc executives Mike Watts and Jann Brown, according to a statement.
This is the single-largest private equity funding transaction in the Indian oil and gas field, a sector largely dominated by large established firms.
The funding will help Magna Energy to develop oil and gas projects across the Indian subcontinent, with an aim to become a full-cycle oil and gas company through acquisitions and securing new hydrocarbon licences.
The primary focus of the company will be development and production with a secondary focus on exploration, the statement said.
The funding will come from Carlyle International Energy Partners (CIEP), a specialist fund that focuses on hydrocarbon and oil and gas sector in Europe, Africa, Latin America and Asia. The investment is led by managing director and head of CIEP, Marcel van Poecke and managing director Bob Maguire.
Marcel van Poecke said: “CIEP will provide capability and support through its global energy platform as we seek to participate in the economic growth of India and neighbouring countries. Our investment will help fund Magna’s development and production plans allowing it to focus on cash generative and organic growth opportunities in the oil and gas sector across the subcontinent.”
“We believe there is strong growth potential in countries such as India, Bangladesh and Myanmar, which seek to grow their local energy markets,” Jann Brown and Mike Watts, Magna’s co-founders and joint CEOs said in the statement.
Watts and Brown founded Magna in 2013. Watts was deputy CEO of Cairn Energy when he stepped down in April 2014, while Brown was CFO and managing director at Cairn Energy. UK-based Cairn Energy is the former parent of Cairn India.
Interestingly, in 2013, another private equity major Warburg Pincus backed new energy exploration and production company Delonex Energy floated by Rahul Dhir, former CEO of Cairn India. Delonex, however, is wholly focused on Africa. Dhir led Cairn India through to its $2 billion IPO and ultimate sale to Vedanta Resources plc.