Cairn India forced to fix IPO price at Rs160
18 Dec 2006
Mumbai: Petroleum and natural gas exploration company Cairn India has fixed the issue price of its initial public offer (IPO) at Rs160 per share after many investors revised their bids from Rs170 to Rs160.
The issue which entered capital market with a public offer of 32,87,99,675 equity shares of Rs10 for cash at a premium to be decided through a 100 per cent book-building process, did not get good subscription as many investors reversed their trades, sources said.
The company will now have to return nearly Rs335 crore to private equity investors for pre-IPO placement done at Rs176 per share.The issue, however, was oversubscribed 1.14 times - QIBs portion subscribed 1.36 times, HNI 0.47 times and retail 0.9 times.
The IPO would help Cairn India raise a minimum of Rs8,616 crore at the lower end of the price band. At the issue price of Rs160 per share, Cairn India would have a market capitalisation of about Rs28,245 crore, excluding any exercise of the over-allotment option.
Cairn India plans to use a major share of funds raised through the IPO to pay Cairn Energy PLC for acquiring shares of Cairn India Holdings. Part of the proceeds would be used to fund development in the Rajasthan block aand additional drilling in Ravva and Cambay fields as also to finance new exploration and appraisal activities in NELP Round VI.
Of the gross proceeds of Rs8,616 crore Cairn India raised from the IPO, Rs5,935 crore would go to Cairn Energy while Cairn India will receive approximately Rs2,681 crore.
DSP
Merrill Lynch and ABN Amro Securities India are acting
as global coordinators and book running lead managers
to the issue along with
book running lead manager JM Morgan Stanley.
The
final offer document is expected to be published on December
19 the statement added.
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