INDIA BUSINESS WORLD - March 16^th - March 31^st - 2008

PETRONAS UPS STAKE IN CAIRN INDIA

CAIRN India raised $625 million (about Rs 2,534.60 crore) through a private placement. The company has sold 5.97% of its equity to stateowned Malaysian oil firm Petronas and the Singapore-based PE firm Orient Global Tamarind Fund. With this, Petronas will consolidate its stake in Cairn India to 12.7% from 9.93% that it acquired during the pre-IPO placement in 2006.

New Zealand-based billionaire Richard Chandler owns Orient Global Tamarind Fund that bought 2.6% stake in the company for Rs 224.30, the same price at which Petronas has agreed to buy the shares. This stake sale will reduce Cairn Energy’s stake in Cairn India to 65%. Cairn India chief executive Rahul Dhir said: “The private placement will help the company meet its investment plans and provide greater financial and operational flexibility.”

Meanwhile, Cairn India plans to invest $500 million to build a 600-kilometre pipeline that can carry 1,50,000 barrels of oil per day (bopd) from its biggest fields in Rajasthan to the coastal state of Gujarat. The pipeline is yet to be cleared by the petroleum ministry. The company is trying to synchronise construction of the pipeline with the production of oil from its Mangla block in 2009. Delays in government approval, mainly because of including the cost of pipeline in the development cost, have caused some anxiety among investors in the last few months.