ADB Exits India's Petronet LNG Selling 39-Million Shares

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Researched by Industrial Info Resources India (Delhi, India)--Asian Development Bank (ADB) (Manila) sold its entire 5.2% stake in Petronet LNG Limited (PLL) (BSE: 532522) (New Delhi) for $117 million via block deals. ADB sold around 39 million shares of India's largest liquefied natural gas importer to CitiGroup and HDFC Asset Management Company Ltd (AMC) (Mumbai) at $2.98 per share.

According to the data available with the Bombay Stock Exchange (BSE), Citigroup Global Markets Mauritius Private Limited (AVID: 4374722) (Port Louis, Mauritius) bought 8.8 million shares, HDFC Top 200 Fund took 3.77 million shares and HDFC Equity Fund purchased 4.67 million shares.

The stake sale come after a long dispute between Petronet's principal promoters and the firm's management led by its Chairman, who is the Secretary to the Ministry of Petroleum and Natural Gas (MoPNG).

Petronet's promoters-- Indian Oil Corporation Limited (IOCL) (BSE: 530965) (New Delhi), Oil and Natural Gas Corporation Limited (ONGC) (BSE: 500312) (Dehradun), GAIL (India) Limited (GAIL) (BSE: 532155) (New Delhi) and Bharat Petroleum Corporation Limited (BPCL) (BSE: 500547) (Mumbai) were originally interested in acquiring ADB's stake but MoPNG refused permission to the Public Sector Undertakings (PSU) to buy the stake.

The company management also opposed to the promoters' proposal as it would have led to PSU's holding crossing 50% that would turn the LNG importer into a government entity. Petronet is registered as a private company even though public sector oil companies hold 50% stake and Secretary MoPNG is its Chairman.

The ADB on August 23, 2011 offered to sell its 5.2% stake in Petronet, in which GAIL, IOCL, BPCL and ONGC hold 12.5% stake each and have a first right of refusal. The board of all the four promoter companies approved exercising the first right of refusal over ADB stake and cash buyout of the multilateral lending agency's interest.

However, the ministry, whose Secretary is the Chairman of PLL, vetoed the proposal at a March 26, 2012 meeting. All the four PSUs than reversed their previous board approvals and gave no objection to ADB stake being sold outside the promoter group.

GDF SUEZ S A (GDF) (GSZ.PA) (Paris) holds 10% stake in Petronet and also had the right of first refusal over ADB's stake sale. But the French energy giant waived this off.

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