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Petronet shares fall 4% after Engie sells entire stake

LiveMint logoLiveMint 08-06-2017 Crystal Tse

Hong Kong/ New Delhi: Petronet LNG fell by the most in nearly seven months after Engie SA, France’s former natural-gas monopoly, sold its entire stake in India’s biggest importer of liquefied natural gas (LNG).

Petronet shares fell by as much as 4.3%, the most since 15 November to Rs421, while the benchmark Sensex index was little changed at 12:04pm. Engie’s GDF International unit sold the stake in two blocks on Thursday. Deal details weren’t immediately available.

Engie was seeking to raise as much as Rs3,300 crore ($513 million) by selling 75 million shares, equal to about a 10% stake, at 417 rupees to 440 rupees apiece, according to terms for the deal obtained by Bloomberg on Wednesday. The price range represented a 0% to 5.2% discount to Petronet’s last close.

Engie flagged its plans to sell the stake in March and said it would first offer the shares to the four Indian state-owned petroleum companies that control Petronet. Oil & Natural Gas Corp. (ONGC), Bharat Petroleum Corp. (BPCL), Indian Oil Corp. (IOC) and GAIL India Ltd. each own about 12.5% of the New Delhi-based LNG importer, data compiled by Bloomberg show.

“This has been an overhang on the Petronet stock for the past couple of months,” Dhaval Joshi, an analyst at Emkay Global Financial Services Ltd., said by phone. “Now that it’s over, we will see the stock bouncing back to recent peaks soon. The business outlook remains strong for Petronet.”

The sale adds to at least $9.5 billion of divestments announced by Engie over the past three years, according to data compiled by Bloomberg. The French company in May entered exclusive talks to sell a 70% stake in its exploration and production unit to Neptune Energy, which is backed by private equity firms Carlyle Group LP and CVC Capital Partners.

Engie is exiting the investment as Indian Prime Minister Narendra Modi pushes the use of cleaner fuels to improve the air quality in cities. Oil Minister Dharmendra Pradhan said last year the nation will lay 15,000 kilometers (9,300 miles) of gas pipelines over five years. India has been seeking to increase the share of natural gas in its energy mix to 15% by 2020, from 6.5%.

Engie, which invested in the company in 2001, hired Citigroup Inc. and JPMorgan Chase & Co. as joint placement agents for the offering, the terms show.

The transaction will help further Engie’s plans to sell €15 billion ($16.9 billion) of assets in the three years through 2018, curbing its exposure to fluctuating prices of oil, gas and power.

It intends to reinvest the proceeds in energy services and infrastructure as well as renewables, which offer more predictable revenue streams through long-term contracts and regulated tariffs. Bloomberg

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