Jubilant postpones overseas listing yet again

Vol 13, PW 20 (25 Mar 10) People & Policy

Cry wolf too often and people stop believing you.

That’s the risk Bhartia-controlled Jubilant Energy is taking by abandoning – once again – plans to list on an overseas stock exchange. This time the Indian private sector explorer seems to have realised going public won’t raise enough money to cover its exploration costs.

Jubilant was considering listing on AIM in London but received a lower valuation than expected from merchant bankers. “Jubilant realised it couldn’t raise the $300m it wanted by going public,â€‌ reports a source.

“It urgently needs $100m to $150m immediately for exploration at several of its blocks.â€‌ Service contractors working with Jubilant complain that it delays payments for as long as six months.

One contractor apparently sent hourly text messages to top company managers at Jubilant daily until his company was paid! Jubilant now seems to have turned its attention to private equity investors. On the table is 5% of its 10% stake in the GSPC-operated KG discovery block KG-OSN-2001/3 to any interested buyer.

Last June it was ready to sell the whole 10% to IndianOil, but the deal fell through. “Jubilant will happily accept $100m to $150m for a 5% stake,â€‌ we hear.

“At that time IOC walked away because Jubilant wanted $250m to $300m for the whole 10% stake.â€‌ One of the easiest ways for Jubilant to raise quick funds would be for it to sell shares in subsidiary companies it set up with stakes in each of its blocks.

“These subsidiaries,â€‌ we hear, “are controlled by a parent or holding company registered abroad which was to be listed.â€‌ Jubilant might now sell shares in these subsidiary companies to private investors.

This method is much simpler and faster than directly selling a stake in a block because it avoids all the bureaucratic paperwork needed to amend the PSC.