EXTRACT: Even after the fall, Cairn India is worth nearly $5.5 billion. Cairn Energy bought out Royal Dutch Shell’s 50% share in the Rajasthan project for $7.25 million in 2002.
THE ARTICLE
Wednesday 10 January 2007
Initial public offerings are generally priced around a 15% discount to fair value. So when a new issue tanks 14%, as Cairn India has, it’s hard to escape the conclusion that the seller, Cairn Energy, was simply too greedy.
True, market conditions haven’t helped. The oil price has fallen about 18% since Dec. 15, when Cairn India’s price was set. Shares in parent Cairn Energy, the bulk of whose value is tied up in its 69.5% stake, have also suffered.