Chinese gas distribution business ENN Group, in which Chinese private equity firm Hony Capital holds a substantial stake, and two other entities sold a 5.14% stake in gas producer Santos (ASX: STO) after close of trade on the ASX on 5 March.
The stake, worth $785 million, was taken up by Australian equity fund managers.
Morgan Stanley and UBS offered the shares in an underwritten block trade at $7.33 a share, a 5.5% discount to the closing price of $7.76.
Santos confirmed the sale of the 107.1 million shares on 8 March. It said ENN was fully supportive of its strategy and direction and was happy to remain the company’s largest individual shareholder with a 9.97% stake.
Santos added that, as a result of the reduced shareholding, a 2017 strategic relationship agreement with ENN regarding board representation and other matters was no longer effective. Accordingly, ENN-nominated director Eugene Shi was to resign from the board.
Hony Capital spent a little over $1 billion in 2015 acquiring an 11.7% stake in Santos through an initial investment which gave it a 1.4% stake and then through a placement and a rights issue plus on market purchases.
Hony Capital paid $6.80 a share for more than 73 million shares in the placement and $3.58 for 38 million shares in the shareholder rights issue.
In March 2016, Hony sold the 11.7% stake in Santos to Shanghai Stock Exchange-listed ENN but took a 17 per cent strategic stake in ENN as part of the transaction.
In November 2016, Hony returned to take a 2.25% stake in Santos in an off-market trade at $3.98 a share.
Investors in Hony include China’s state-owned Legend Holdings – the holding company for computer manufacturer Lenovo – Singapore sovereign wealth fund Temasek and Canada Pension Plan Investment Board (CPPIB).