Shell Sells Remaining Stake In Mahanagar Gas, Exits City Gas Distribution Business In India
Royal Dutch Shell’s BG Asia Pacific Holdings sold 9.98 million shares in Mahanagar Gas through block deals at Rs 780 apiece.
The Netherlands-based Royal Dutch Shell Plc’s India subsidiary has sold its entire stake in Mahanagar Gas Ltd. for Rs 770 crore, in the process exiting the city gas distribution business in the country.
According to stock exchange data, BG Asia Pacific Holdings, a wholly-owned subsidiary of Royal Dutch Shell, sold 9.98 million shares, or about 10 percent stake, in Mahanagar Gas through block deals at Rs 780 apiece.
Mahanagar Gas, in which GAIL (India) Ltd. holds a majority stake, sells compressed natural gas to automobiles and piped natural gas to households in around Mumbai. The Maharashtra government has 10 percent stake in Mahanagar Gas, while the remainder is with the public.
When Mahanagar Gas was listed in July 2016, Shell and GAIL (India) held 32.5 percent stake each in the company. In 2018, Shell sold 24 percent stake in two tranches—8.5 percent in April and 14 percent in August—in the open market through bulk deals.
On Tuesday, Shell sold its stake in the open market after GAIL (India) waived its first right of refusal. Shell exercised its option to exit the city gas distribution business as the lock-in period for minimum promoter holding after listing of a company expired last month.
According to the shareholding agreement, partners had the first right to buy in case either one of them wanted to exit.
"We already have a controlling stake. What purpose would it have served to buy the additional stake at market price?" said a senior GAIL official, adding that the price was “too high". "It doesn't make any sense for us to buy the stake at the market price.”
When Shell first started diluting its take in Mahanagar Gas in April last year, the company had stated that this was "part of Shell's ongoing portfolio optimisation to transform Shell into a simpler company, delivering stronger returns".
"Our investment in the Hazira LNG terminal in Gujarat and the recent creation of Shell Energy India, our gas marketing and trading business, shows our commitment to grow in India and to increase gas penetration in the country," it had said.
Shell operates a 5 MTPA LNG import terminal at Hazira in Gujarat.
Founded in 1995, Mahanagar Gas at present sells CNG to over six lakh vehicles and piped natural gas to over 10 lakh households in Mumbai. It operates 203 CNG stations and has a pipeline network of 4,838 km.
Mahanagar Gas was originally an equal joint venture of GAIL (India) and UK's BG Group. Shell became a partner after it acquired BG Group in February 2016.