Carlyle Group has will invest up to $500 million in Magna Energy Ltd, an India-focused upstream oil and gas company, the global private equity firm said in a statement on Monday.
Magna Energy is led by Mike Watts and Jann Brown. Watts had earlier led Cairn India's exploration in Rajasthan in 2004, which led to the discovery of Mangala oil field with reserves of over 1 billion barrels. This was the biggest onshore oil find in India in over 20 years.
Carlyle's funds will help Magna become a full-cycle oil and gas company through acquisitions and local licenses. Watts' experience of striking gold in Rajasthan will surely help, as will the 60 years of combined experience that they bring to the table. The company will primarily focus on development and production.
Watts left Cairn, a British firm, in 2014 to start the new venture with former CFO Brown. Washington-based Carlyle Group has over $193 billion of assets under management.
India imports more than 80 percent of its crude. The Narendra Modi government also seeks to create a strategic oil reserve of 90 days of imports by 2020. Higher production in India will help reduce the massive import bill.
Magna will be able to bid for more oil fields that the government plans to auction this year under the New Exploration Licensing Policy. The company holds a 17 percent stake in Oilex Ltd., which owns a gas project in the Cambay Basin region in Gujarat.
(With agency inputs)