The Hindu Business Line : Cairn India: IPO price band at Rs 160-190

Edinburgh-based Cairn Energy has set a price range of Rs 160-190 per share for the forthcoming initial public offering of Cairn India Ltd, valuing the latter at over Rs 33,540 crore ($ 7.5 billion) at the upper end of the price band. At the lower end of the band, the valuation works out to Rs 28,245 crore ($6.32 billion).

The IPO, with its offer of 32.88 crore shares, will raise between Rs 5,261 crore and Rs 6,247 crore from the market.

The total flotation of the company consists of 53.85 crore shares when counting the 20.97 crore shares privately placed with a clutch of investors, mainly Malaysia-based Petronas. The company had raised Rs 3,700 crore ($822 million) from this placement. The private placement works out to approximately Rs 176 per share.

"Following last week's successful private placing, we are now commencing the next stage of the proposed flotation of the Cairn India business. The price range for the flotation reflects not only the current Cairn share price, but also our belief in the long term potential value of the Indian business which we have now seen positively supported by our private placing," said Sir Bill Gammell, Chief Executive, Cairn Energy Plc, in a statement.

The total flotation would mean gross proceeds of between Rs 8,616 crore and Rs 9,947 crore. Cairn India will retain approximately Rs 2,682 crore of the proceeds. Parent company Cairn will receive gross proceeds of between Rs 5,934 crore and Rs 7,265 crore, said a statement from Cairn.

The final offer price for the issue would be determined following a book building exercise expected to completed in mid-December 2006.

Cairn India may also grant an over-allotment option in accordance with SEBI guidelines. Post the public offer, parent company Cairn Energy Plc will hold 69.5 per cent in Cairn India. ABN AMRO Rothschild, Merrill Lynch and Morgan Stanley are acting as book running lead managers in relation to the initial public offering.