Date:02/11/2006 URL: http://www.thehindu.com/2006/11/02/stories/2006110205351900.htm

Business

Cairn India to raise $1.8 billion in IPO

A part of the proceeds to fund its ongoing business

NEW DELHI: Cairn Energy Plc of the U.K. on Wednesday said it would raise at least $1.8 billion from the proposed initial public offering (IPO) of its Indian operations in December.

A part of the proceeds, which would be $1.9 billion if an over allotment option is exercised in full, would be used to fund its ongoing business, while the balance would be returned to shareholders, Cairn said in a statement.

Of the total funds garnered from sale of 538.47 million shares of Cairn India Ltd. (CIL), the Indian subsidiary would retain only Rs. 2,700 crore ($600 million) and the remaining funds may go to shareholders of the U.K. firm.

Cairn Energy Plc plans to split its business into two — Cairn India Ltd. (which would hold the company's India interests, including the Rajasthan oilfield, Cambay oil and gas fields and Ravva oil and gas field) and an exploration company with interests in exploration assets in Bangladesh, Nepal and adjoining parts of India.

An IPO of Indian business through the book-building route is planned in December. Post-IPO, Cairn Energy's stake in CIL would be 69.5 per cent.

Cairn plans to hold an extraordinary shareholder meeting on November 17 to vote on the planned flotation.

Cairn said it plans to set the lower end of the price range for the ``book building'' process at a price that values the Indian business at Rs. 23,550 crore ($5.12 billion).

Following the proposed flotation, there would be two arms to the Group's business: a majority shareholding in the listed Indian business and an exploration and production business (owned and operated by a wholly-owned subsidiary of the company, Capricorn). — PTI