Less than three months since its last stake sale, Edinburgh-based Cairn Energy is further diluting its holding in Cairn India Ltd through a block deal.
According to sources in the know of the development, Cairn UK Holdings is offloading a near $940-million stake in Cairn India. As much as 15.26 crore shares of Cairn India — about 8 per cent stake — is being offered by Cairn UK to investors in the price range of Rs 317-328 a share.
Post this deal, Cairn’s stake in Cairn India will come down to about 10 per cent from the current 18.3 per cent. Cairn has appointed Citigroup as sole book runner for the transaction. The block deal is expected to be done on Tuesday across stock exchanges.
On June 29, Cairn Energy had sold 3.5 per cent of its stake in Cairn India in 13 tranches and raised close to $371 million through this stock market deal. This was the third big block deal this fiscal in India. The earlier two deals involved sale of stakes in Axis Bank and YES Bank by HSBC.
Those closely watching Cairn Energy said the deal was an indication that the Scottish company either was on a hunt for fresh investments or was in need for funds for its existing projects. But they are quick to point out that ‘not much should be read into it’, as this was in keeping with the business model of Cairn Energy, which essentially is an exploration company. In fact, Cairn’s India operation was an exception in this respect — both exploration and development were done here, sources added.
Cairn India shares closed at Rs 346.70 at the NSE on Monday.
According to Cairn India’s presentation of September 5, its shareholding pattern was as follows: Vedanta Group holds 58.8 per cent, foreign institutions 11 per cent, financial institutions 5.6 per cent, mutual funds 1.6 per cent, other institutions 2.1 per cent and retail investors 2.5 per cent.