Shell arm to leave Mahanagar Gas Nigam for Rs 724 crore
BENGALURU BG Asia Pacific , an arm of the main global energy Shell is dating Mahanagar Gas Nigam through a block of at least Rs 724 crore. Citibank was mandated to execute the agreement on Tuesday.
BG Asia Pacific is selling nearlt 99 lakh shares of Mahanagar Gas for about $102 million or Rs 724 crore, at a floor price of Rs 733 per shares, which is 6.9% discount to Monday’s closing price of the stock.
Shell has been offloading its stake in Mahanagar Gas since last year and this is the last chunk that it is putting up on the block.
After Mahanagar Gas was listed on the stock exchange in July 2016, BG Asia Pacific acquired a 34% stake in the company. That same year Netherlands-based Royal Dutch Shell Plc acquired BG Group Plc and all its assets worldwide -- making BG Asia Pacific a wholly-owned unit of Shell India. After the acquisition, Shell India had offloaded 24% of its shareholding in two tranches—8.5% in April and 14% in August of that year—in the open market through bulk deals. These two tranches reduced Shell ’s holding to 10%.
The reason for Shell 's slow and steady offloading would be SEBI's requirements that stipulate minimum promoters’ contribution shall be locked-in for three years from the date of allotment in a public issue.
Founded in 1995, Mahanagar Gas is a JV between the Maharashtra state government, PSU GAIL Ltd and BG Asia Pacific . While GAIL holds 32.5% and BG 10%, the remaining stake of 57.5% is held by public shareholders, including the Maharashtra government, financial institutions and the others. Mahanagar Gas sells CNG to automobiles and piped natural gas to homes and industries in and around Mumbai. When selling CNG to more than 6 lakh vehicles and piped gas to 10 Lakh homes, Mahanagar has about 220 CNG outlets.
Mahanagar Gas is considered largely profitable by analysts despite some challenges, with the government scrapping of CNG buses. In its last quarter, the company recorded a profit growth of 33% to Rs 170 million rupees and a sales increase of 22.3% to Rs 757.5 million rupees.