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Friday, October 13, 2006

Cairn India files for $ 1.5-2 billion IPO

Investors have a big one coming their way - a chance to buy into a multinational oil company. Cairn India will float a public issue through which it hopes to mop up between USD 1.5 billion and USD 2 billion this year, reports CNBC-TV18.

It will be the biggest public issue. And for the investor, the best chance to own part of a multinational oil company. Cairn Energy's Indian subsidiary, Cairn India has filed for a USD 1.5-2 billion IPO with Sebi and plans to list in India by December.

The company will offer 53.84 crore new shares. Part of the proceeds will be used to fund expansion. And a large chunk will pay for assets it will buy at a premium from its parent.

"Given the success of the business and the significant discoveries made, the value we have created is far in excess of the investments we made," said Rahul Dhir, CEO, Cairn India.

Cairn India's main assets, in Gujarat and Rajasthan, have reserves of 6.2 billion barrels of oil. Cairn India will invest nearly USD 1 billion to develop the Balmer basin, which is estimated to have reserves of 3.6 billion barrels of oil equivalent. It plans to take the oil fields commercial by 2010. Cairn India has 70% development stake in these fields and ONGC has the rest.

'We have just initiated a 7 well campaign in Ravva. We are doing a lot of offshore work in Cambay. There is a broad scope of activity and the Rajasthan numbers gives a sense of what we will spend as a minimum,' said Rahul Dhir.

The company is valued at USD 6.5 billion on the upper end of the price band and Cairn India might also consider a pre-IPO placement. It expects revenues of USD 300 million this year. And with crude prices hovering around USD 60, this issue seems set to excite the market


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