Petronet Slides Most in Seven Months After Engie Sells Stake

  • Former French monopoly raises $490 million exiting investment
  • Engie prices sale of Petronet shares near low end of range

Petronet LNG Ltd. fell by the most in nearly seven months after Engie SA, the former French natural-gas monopoly, sold its entire stake in India’s biggest importer of liquefied natural gas.

Petronet shares fell as much as 4.3 percent, the most since Nov. 15, to 421 rupees at 1:24 p.m. Thursday in Mumbai. The benchmark S&P BSE Sensex Index was little changed. Engie’s GDF International unit raised 31.58 billion rupees ($490 million) after pricing the sale near the low end of a marketed range, according to terms for the deal obtained by Bloomberg. 

The French company sold 75 million Petronet shares at 421 rupees apiece, representing a 4.3 percent discount to Wednesday’s close, the terms showed Thursday. It had offered the shares at 417 rupees to 440 rupees each.

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., Bharat Petroleum Corp., Indian Oil Corp. and GAIL India Ltd. each own about 12.5 percent 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 Thursday. “Now that it’s over, we will see the stock bouncing back to recent peaks soon. The business outlook remains strong for Petronet.”

Engie Divestments

Engie, which invested in Petronet in 2001, worked with Citigroup Inc. and JPMorgan Chase & Co. to sell its stake, the terms show.

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 percent 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 percent by 2020, from 6.5 percent.

The transaction will help further Engie’s plans to sell 15 billion euros ($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.

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