The deal, to be approved by shareholders, will net Fortune Oil $200m in cash on completion of the transaction and a further $200m as a deferred consideration, which could be taken as shares.
The oil company also has the right to nominate two directors to China Gas’s board.
Fortune Oil held an 18.4 per cent stake in China Gas as of 16 November, primarily through a joint venture formed last year with one of the company's founders.
London-listed Fortune Oil said yesterday that both companies’ gas assets are “complementary”, and it marks a “unique opportunity” for it to become a large shareholder in China Gas.
“The company intends to be a long term shareholder in China Gas so as to benefit from the potential growth in this sector in China over the medium term,” the oil firm added.
Analysts at VSA Capital yesterday hailed the sale. “An investment in the rapidly growing Chinese gas market is likely to grow substantially over the next 10 years and thus should trade at a substantial premium to Western gas distribution companies,” they said yesterday in a note.
ADVISERS BNP PARIBAS
Paul Staples, head of UK corporate finance at BNP Paribas, led the team on the sale of Fortune Oil’s gas business to China Gas Holdings. Staples, who spent the majority of his early career at Schroders and Citigroup, also sits on BNP Paribas’ executive committee. He joined the bank in 2005.
The banker has presided over a significant period of expansion for the advisory business in London, with a particular focus on major cross-border deals.
BNP Paribas has figured prominently in recent years within the energy & natural resources sector, advising EDF on its offer for British Energy in 2008 and GDF on its offer for International Power in April this year.
Earlier this year, Staples led the team advising Ferrovial on its successful sale of Edinburgh Airport.
He is also a chartered accountant and graduated with a first class honours degree in history from Trinity College, Cambridge.
Staples is working alongside colleague Kenny Yau from the London office on the transaction. Kenneth Quinn is also working on the deal in the Hong Kong office.
Oriel Securities also had a role on the deal, with Michael Shaw and Stewart Wallace working on the transaction.