Engie to sell interest in India's biggest LNG importer

By Saket Sundria and Debjit Chakraborty on 3/10/2017

MUMBAI (Bloomberg) -- Engie SA, France’s former natural-gas monopoly, plans to sell its entire 10% holding in India’s biggest importer of liquefied natural gas.

Engie unit GDF International has written to the four Indian state companies that together own half of Petronet LNG Ltd. to offer shares in proportion to their holding, Petronet said Thursday in a filing. Engie, which invested in 2001, said in a separate statement it considers its stake “mainly a financial participation” and retains a “strong belief in PLL’s long-term growth potential.”

Explorer Oil & Natural Gas Corp., refiners Bharat Petroleum Corp. and Indian Oil Corp., and gas distributor GAIL India Ltd. form the founding group, with a 12.5% stake each.

“It is mandatory for GDF to offer its holding to other founders as per the shareholders’ agreement,” R. K. Garg, finance director of Petronet LNG, said by phone. “If the other founders don’t buy, GDF can sell it to anyone it wishes.”

Engie holds 75 million shares in Petronet, valued at about 29 billion rupees ($440 million) at current market prices. Petronet rose 0.8% to 389.6 rupees in Mumbai trading on Thursday after falling more than 2% following the announcement.

May not buy

The founders may not snap up the stake, according to A. K. Srinivasan, director of finance at ONGC. “It is not necessary for us to buy,” he said. “The structure has to be maintained otherwise government approval is required.”

In 2014, the Asian Development Bank sold 39 million shares in Petronet. It first offered those to the four founders, who chose not to buy them. The ADB eventually sold its 5.2% stake on the open market.

“I’m not sure they can sell a 10% stake easily in the market,” said Sabri Hazarika, a Mumbai-based analyst at Phillipcapital India Pvt. “Some other strategic investors can come in, like companies from Qatar or the UAE.”

Subir Purkayastha, director of finance at GAIL India, couldn’t be reached for comment. A. K. Sharma, finance head of Indian Oil and P. Balasubramanian, director of finance at BPCL, also couldn’t be reached.

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