Hony ups stake in Australia’s Santos

A filing showed that Hony bought an additional 48 million shares, or a 2.3% stake, in Santos at A$3.84 apiece. The price represented a 6% premium to the May 3 closing price of A$3.63.

The move came a few days after the private equity firm announced that it had signed a formal agreement to act in concert with Chinese gas distributor ENN Group regarding Santos. The two parties and their affiliates now control 15.1% of the company, up from 12.8%.

Hony was responsible for ENN's initial investment in Santos. The GP owned 1.4% of the company and then purchased an additional 6.5% interest for A$500 million in late 2015, as part of efforts to reduce debt. Hony further increased its holding before exiting an 11.7% stake to ENN for $755 million in March 2016. The transaction positioned the Chinese company - which has ambitions to become a vertically integrated and international natural gas player - as the largest single shareholder in Santos.  

As part of the 2016 divestment, Hony in turn acquired RMB2.47 billion ($380 million) worth of new shares in ENN Ecological, a Shanghai-listed subsidiary of ENN, become the second-largest shareholder. Then last November Hony resumed its interest in Santos, buying an approximately 2.25% stake.

Established in 1954, 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.

Revenue reached $2.6 billion last year, 6% higher than 2015, although the growth in sales volumes was offset by lower realized oil and LNG prices, the company said. The average realized crude oil and LNG prices fell 14% and 33% year-on-year, respectively. Santos' net loss narrowed to $1.05 billion in 2016 from $2 billion in 2015.

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