Hony invests $121m in Australian oil player Santos

In a statement to the Australian Stock Exchange, Santos said Hony bought 40 million shares, representing 2.25% of the company's total issued capital, at A$3.98 apiece. The price represented an 11% premium to the November 10 closing price of A$3.58. The latest transaction takes Hony's total stake to approximately 3.2%.

The private equity firm initially had a 1.4% stake in Santos, and then purchased an additional 6.5% interest for A$500 million in November last year, as part of the company's efforts to reduce debt. Hony further increased its holding before exiting an 11.7% stake to ENN Group, a major Chinese privately-held gas distributor, for $755 million in March.

Hony in turn acquired RMB2.47 billion ($380 million) worth of new shares in ENN Ecological, a Shanghai-listed subsidiary of ENN, via Hony Capital Fund VIII, which closed at $2.7 billion in April. After the transaction, the GP became the second largest shareholder in the subsidiary. 

Hony's chairman John Zhao said at the time the PE firm had invested in Santos "because of its strategic position in Australia and synergies with the rapidly growing China energy market."

Santos concentrates on the exploration and production of upstream natural gas and petroleum resources, as well as the development of midstream liquefied natural gas (LNG) terminals in Asia. At present, it has stakes in three terminal projects in Australia and Papua New Guinea. Revenue came to A$3.3 billion in the 2015 financial year, down from A$4.1 billion in 2014. Meanwhile, net losses widened to A$2.7 billion from A$935 million.

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• Topics
• Greater China
• Australasia
• Cleantech
• PIPEs
• China
• Hony Capital
• Australia
• Commodities