The Hindu Business Line : Prize Petroleum looking for strategic investor

A final decision on whether to get a strategic partner or induct a private equity firm would be taken by the major stakeholders as well as the board of Prize Petroleum.

New Delhi April 20

Prize Petroleum Company Ltd is considering the prospect of roping in a strategic investor. The strategic partner would not only come in as an equity stakeholder, but also extend technical expertise, official sources said.

This is even while the company is examining the prospects of inducting a private equity firm as a partner into the company.

Prize Petroleum has been promoted as an oil exploration and production company by Hindustan Petroleum Corporation Ltd (HPCL) and other investors in the company include three major financial institutions of India: ICICI, HDFC and ICICI ventures.

Independent Advisor

A final decision on whether to get a strategic partner or induct a private equity firm would be taken by the major stakeholders (HPCL and other promoters) as well as the board of Prize Petroleum. The company's board is expected to meet sometime next month.

"Only after the current stakeholders in the company take a decision on whether the company would opt for inducting a private equity firm or go for a strategic partner, the board of Prize Petroleum would take a view," the official explained.

For inducting a private equity company, the company had appointed Grant Thornton as an independent advisor. It was in talks with three private equity firms for raising $50 million. The companies that have envisaged interest include IDFC Private Equity, Sabre Capital and Barings Inc.

Raising Resources

With the induction of equity partner, HPCL's holding in the company is expected to remain at 50 per cent the balance would be with financial institutions and the private equity firm or the strategic partner.

Prize Petroleum was looking at garnering about $50 million by offering 50 per cent stake. The company had also been examining the prospects of coming out with an initial public offering for raising resources. Currently, the company's paid-up equity capital stands at Rs 20 crore though authorised is Rs 720 crore.

Prize Petroleum currently has four fields in Gujarat. Of these, three are marginal fields and one is an exploration field under the product-sharing contract with the Government. Last year, the company had acquired a cluster of three fields (Cluster 7) in Mumbai offshore.

The company in consortium with HPCL, M3nergy (Malaysia) have entered into a service contract for development of three offshore marginal fields.

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