Cairn Energy is likely to raise $2 billion (nearly Rs 9,400 crore) through an initial public offering slated to be the largest in the Indian market so far. The company on Thursday filed its draft red herring prospectus with the Securities and Exchange Board of India.
With 538.47 million shares on offer, back-of-the-envelope calculations suggest the issue may be priced at about Rs 175 per share. However, the actual share price will be determined through a book-built process.
DSP Merril Lynch and ABN-Amro-Rochelle are the lead managers to the issue.
Cairn Energy, the UK-based parent company, will dilute 30.5 per cent and retain a 69.5 per cent stake in the company. Of this, 70 per cent will be reserved for qualified institutional bidders while 30 per cent will be offered to retail investors.
International Finance Corporation, the private investment arm of the World Bank, has already announced an investment of up to $45 million in the firm.
Cairn Energy has assets of 754 million barrels oil equivalent (MMBOE) in Rajasthan, of which it owns 472 MMBOE. It also estimates additional reserves of 414 MMBOE in the Rajasthan fields and 157 MMBOE in fields outside Rajasthan, much of which is in the deepwater block K6-DWN-982.
Cairn India would use the money raised through the issue for acquiring Indian assets of Cain Energy, Cairn India CEO Rahul Dhir said. Cairn owns 13 exploration blocks in the country, including Ravva offshore on the east coast and Cambay Basin on the Gujarat coast. The Rajasthan blocks are expected to begin production by 2009.
Dhir said Cairn India would own 10 of the 13 assets of the parent company and the three blocks in the Himalayan fold would be jointly owned by the two firms. Two of these blocks fall in Uttar Pradesh and one in Bihar, while some small ones are in Nepal.
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