Life Insurance Corp of India (LIC) has hiked its stake in Cairn India to over 5% through open market route that are about 5% costlier than the price at which the firm's former promoter, Cairn Energy has been selling its shares.
LIC, according to regulatory filing to the stock exchanges, on June 22 bought 778,009 shares of Cairn India from the open market at about Rs 324 per share.
After the acquisition, LIC's shareholding in Cairn India, which was last year bought by London-based mining group Vedanta Resources, has gone to 5.029% from 4.988% previously.
The price at which the open market purchases were executed by LIC is about 5% higher than the price at which Edinburgh-based Cairn Energy plc last week sold its 3.5% stake in Cairn India.
Cairn Energy sold 6.67 crore shares, or 3.5% of the Indian company's equity, for about $360 million (over Rs 2,061 crore), according to a company statement.
The Edinburgh-based firm, which had 21.8% shareholding in Cairn India after selling 40% shares to Vedanta Group last year for Rs 355 per share, has been in the market to sell its residual stake for sometime now.
Last week, it had planned to sell shares in the Rs 307.4 to Rs 317.5 range. It eventually sold the shares at Rs 308.73 a piece, a 6.6% discount to Cairn India stock's average share price this quarter.
The Scottish company will own 18.3% of Cairn India after the sale.
Market analysts wondered why LIC chose to buy Cairn India shares from open market when Cairn Energy has been selling stocks at a discount.
Vedanta Resources plc and its unit Sesa Goa Ltd in December last year completed buying a 59% stake in Cairn India from Cairn Energy and other shareholders for $8.67 billion.
