Petronas, the Malaysian state oil company, has emerged as the biggest investor in a placing of $822 million (£429 million) of shares in Cairn India ahead of the company’s public flotation on the Bombay stock exchange next month.
Cairn Energy intends to sell just over 30 per cent of its Indian subsidiary and in a pre-flotation placing yesterday sold 12 per cent of the Indian company to investors. At the placing price, the Indian company, which houses Cairn’s Rajasthan oil discoveries, is valued at $6.9 billion.
News of the successful placing of more than 209 millon shares at 176 rupees each helped to lift Cairn Energy’s stock by 3.6 per cent to £19.88 in London.
Petronas took on 176 million shares in the placing, which will give it a 10 per cent stake in Cairn India after the public offering next month. It said that it had no plans to buy further shares and viewed the holding as a “long-term supportive investment”.
The Malaysian company has pursued an aggressive expansion policy abroad, seeking to add to its domestic oil and gas with reserves in other countries, including Sudan and Egypt. It has also targeted Britain, acquiring a third share in Dragon LNG, a liquefied natural gas terminal being built at Milford Haven, and, in September last year, it paid more than £300 million for a 4 per cent stake in Centrica, the owner of the British Gas brand.
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Petronas’s investment reflects competition among state oil companies to gain control of oil and gas reserves. Cairn India’s Rajasthan discovery may hold up to 3 billion barrels. The Malaysian group has large cash resources and said yesterday that its half-year net profit had risen by more than a fifth to $7.5 billion, aided by high oil prices.
Cairn Energy said the rest of the stock sold in the placing went to Indian and international institutional investors.