Petronas takes 10% stake in Cairn India

Cairn India has raised Rs 3,700 crore ($822 million) in a pre-flotation placement, with Petronas of Malaysia buying a sizeable chunk of the stock.

Of the 20.97 crore shares sold by the company at Rs 176.48 apiece, Petronas bought 17.65 crore shares. This represents about 10 per cent of the expected share capital of Cairn India. The other buyers included the Videocon group, which bought stock worth $50 million.

The placement accounts for 11.88 per cent of the issued share capital of Cairn India and values the company at about Rs 31,154 crore ($6.92 billion).

The company said it was on track to complete its initial public offer in December. ABN-AMRO Rothschild, Merrill Lynch, and JM Morgan Stanley are the lead managers to the issue.

In a statement, the company said that since the pre-flotation placing had gone so well, Cairn was reducing the public offering of Cairn India shares to 32.88 crore shares from 53.85 crore. At $1.8 billion, the issue was billed as the largest IPO to hit the Indian market.

At 0810 GMT, Cairn Energy's shares were up 3.7 per cent to £19.89, the biggest rise on the UK's benchmark FTSE-100 index, which valued the business at about £3.1 billion ($5.9 billion).

The company plans to invest $1.5 billion in its Rajasthan oilfield, from which it expects a peak output of 150,000 barrels per day from 2009 onwards.