New Delhi: Shell India, the local arm of the Netherlands-based Royal Dutch Shell Plc, exited Tuesday the city gas business in the country after it sold its 10 per cent stake in Mahanagar Gas Ltd (MGL) for Rs 770 crore.
According to stock exchange data, BG Asia Pacific Holdings (BGAPH), a wholly-owned subsidiary of Shell, sold 99.77 lakh shares in the company through block deals at Rs 780 apiece.
Mahanagar Gas Ltd (MGL), where the majority stake is owned by state-owned GAIL India Ltd, sells compressed natural gas (CNG) to automobiles and piped-cooking gas to households in and around Mumbai. In a regulatory filing, MGL put out a letter from BG Asia Pacific Holdings Pte Ltd that informed about the sale of 98.77 lakh shares. It listed mode of sale as ‘sale of equity shares on the open market through the block deal window’.
When MGL was listed in July 2016, Shell and GAIL held 32.5 per cent stake each in the company. Last year, Shell sold 24 per cent of its shareholding in two tranches — 8.5 per cent in April and 14 per cent in August – in the open market through bulk deals.
Shell had April 11, 2018 sold 9.87 lakh shares at Rs 909.66 apiece. August 23, 2018 it sold 13.28 lakh shares for Rs 854.54 apiece.
Shell sold its stake in the open market after GAIL waived off its first right of refusal.
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,” a senior GAIL official said. He asserted the sale price was ‘too high’. “It doesn’t make any sense for us to buy the stake at the market price,” he added.
When Shell first started diluting its stake in MGL 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 receiving 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,” Shell had then said.
Shell operates a five million tonne a year liquefied natural gas (LNG) import terminal at Hazira in Gujarat.