FIRST-day trading in shares in Essar Energy was weak yesterday, leaving the closing price of the new stock at 389.5p, below an already reduced issue price of 420p a share.
Dealers said that the group, which is 76 per cent owned by its Indian parent, had inadvertently chosen a bad day for first day dealings given that sentiment in the oil and gas sector had been adversely affected by the oil spill problems at BP.
The group has also been beset by issues over its corporate governance and its debt levels and the prospectus for the share offering, out yesterday on the company’s web-site, lists 36 pages of risk factors.
The prospectus also discloses that the Essar Energy chief executive Naresh Nayyar, who remains managing director of Essar Oil, could earn up to £1.13m if he meets certain performance targets.
Last week, the power and oil-and-gas exploration company lowered the price for its offer to 420p from its previous range of 450-550p.
At yesterday’s closing price the market capitalisation of the company was around £5.1bn, still sufficient to place the group in London’s FTSE 100 index.
Essar is being advised by JP Morgan.