India will again make British shareholders of Cairn Energy Plc richer as most of the $8.48 billion that Edinburgh-based firm will get from selling majority stake in Cairn India will go to them, a repeat of 2006 when money raised from India listing were paid to them.
Cairn Energy Plc Chief Executive Bill Gammell said: "A substantial amount" of the $8.48 billion proceeds from sale of up to 51 per cent stake in the India unit to mining group Vedanta Resources would be "returned to Cairn (Energy Plc) shareholders."
Gammell himself will be a big beneficiary as the number of shares directly held by him have risen ten-fold to 3,931,778 as on March 16, 2010 from 371,302 on September 25, 2009, according to the company's website. His shareholding is, however, less than a per cent.
Cairn Energy Plc holds 62.37 per cent stake in Cairn India, its mainstay subsidiary that has three producing assets in India including the giant Mangala oilfield in Rajasthan block.
In fact, in 2005, Cairn Energy had offered its interest in the Rajasthan and other fields in India to state-owned Oil and Natural Gas Corp (ONGC) for close to $5 billion, but when the PSU did not agree with the valuation, it floated a India unit and listed the firm on the stock market.
The Initial Public Offer (IPO) of Cairn India raised about $2 billion, the biggest beneficiary of which was again the overseas shareholders of Cairn Energy. About $1.3-1.4 billion out of the IPO proceeds were paid to UK-listed firm's shareholders.
Incidentally, Cairn India was the only cash profit generating subsidiary in the portfolio of Cairn Energy. The company has exploration assets in Greenland.
More From This Section
Cairn India produces 125,000 barrels per day from Mangala, the largest onland oilfield in the country, and the output has the potential to rise to 150,000 bpd (7.5 million tons a year).
From the Rajasthan block, the company expects to produce about 240,000 bpd (12 million tons), almost equivalent to what ONGC produces from its prime Mumbai High fields.
US-based BlackRock Investment Management holds 11.22 per cent in Cairn Energy while HSBC Global Asset Management has 8 per cent interest.
Scotland's leading independent investment manager Baillie Gifford holds 6.22 per cent, UK's Legal & General Investment Management 5.41 per cent, F&C Asset Management 3.70 per cent, Walter Scott & Partners 3.54 per cent, Schroder Investment Management 3.36 per cent and Fidelity Investments 3.97 per cent.
In 2010, when Cairn India made handsome profits, Gammell's basic salary increased to 600,000 British pound from 552,000 pound in the previous year.