Investors in Vedanta Resources were bidding farewell to the boss of a major unit yesterday. Eight months since the miner took control of Cairn India in a deal worth $8.7bn (£5.6bn), the Square Mile was in for a shock after the well-regarded boss of the oil and gas company announced he was resigning.
Rahul Dhir, a former Merrill Lynch banker, has been in charge of Cairn India for more than six years, a period that saw it float on the Bombay Stock Exchange in 2007 and Vedanta complete the acquisition of a 58.5 per cent majority stake last December.
Yesterday, in an announcement that surprised many, Cairn India revealed he was quitting his roles as both chief executive and managing director of the company "to pursue his entrepreneurial interests".
Following the news, Vedanta closed deep in the red, retreating 21p to 986p, while Cairn Energy – which still owns 18 per cent of Cairn India after selling a controlling stake to Vedanta – dropped 12.9p to 296.5p.
A number of City voices were praising Mr Dhir, with Atif Latif, director of trading at Guardian Stockbrokers, warning that any replacement "will be closely compared and scrutinised as [he] was a key part of the main management team".
Meanwhile, Liberum Capital's Ash Lazenby said that with Cairn India being a "key division... the departure of a top management figure may trigger a negative reaction in the immediate term, but I wouldn't expect it to reflect in [Vedanta's] performance nor Cairn India's operational performance going forward".
With Mr Dhir holding a decent chunk of shares, any punters hoping to follow his example were left frustrated as he told Bloomberg he was unsure whether or not he would sell his stake, which is worth around 1.1bn rupees.
For much of the session the FTSE 100 was on course to fall back after having gained over 340 points in less than two weeks. Yet the benchmark index managed a last-ditch recovery and closed 4.68 points stronger at 5,845.92, its highest since the beginning of April.
The biggest blue-chip riser was Standard Chartered, which reacted to losing 22 per cent over the previous two days by jumping 87p to 1,315.5p as Berenberg's James Chappell upgraded his rating to "hold". However, the scribbler stopped short of recommending the stock as a buy, arguing he was "currently unable to gain suitable comfort regarding the potential impact" of US regulators' allegations Standard Chartered had laundered $250 billion from Iran.
At the other end, Smiths Group dipped 38p to 1,075p after Bank of America Merrill Lynch's scribblers cut their advice to "underperform". Although they praised the airport-scanner maker's "assets on a long-term view," they were urging caution over its pension deficit as well as its high exposure to government spending.
A number of stocks were trading ex-dividend, including utility Pennon (23.5p lower at 730p) and pharma giant AstraZeneca (68p lower at 3,015p). The latter was also hit by the news that the development of its severe sepsis drug CytoFab is being halted after the failure of a clinical trial, although Astra's partner in the project, BTG, managed to tick up 5p to 343p.
There's been no stopping Heritage Oil since trading resumed in the explorer, having been suspended for over a month following the announcement of its proposed move into Nigeria in July. Having spurted up 21 per cent on Tuesday, yesterday it powered up another 28.2p to 177p, although before that the stock had shed three-quarters of its value since January 2011.
Max Petroleum has certainly had it fair share of problems recently – the oil explorer has seen drilling tools get stuck in its Kazakh NUR-1 well twice in a matter of months while in July it suspended work at the project because of a lack of cash. Yesterday things were looking cheerier after Max signed a deal with Zhanros Drilling that means the contractor will back up to $7m worth of drilling services in return for a maximum 90.3m shares.
In response, the Aim-listed group – which back in 2007 traded around 200p, but is now a penny stock – shot up 0.42p to 4.16p. Merchant Securities' Brendan Long welcomed the agreement as "a positive development" although he added that in his opinion Max "remains in a situation of financial stress".Reuse content