Ros­neft’s part­ner in Es­sar deal likely to sell stake

Kuwait Times - - BUSINESS -

MOS­COW: Rus­sian pri­vate in­vest­ment group United Cap­i­tal Part­ners (UCP), which is team­ing up with oil gi­ant Ros­neft to buy In­dia’s Es­sar Oil in a $12.9 bil­lion deal, said it may sell its stake within five years. The pur­chase of Es­sar Oil, by Rus­sia’s state-owned Ros­neft and a con­sor­tium of UCP and global oil trader Trafigura, will be the big­gest for­eign ac­qui­si­tion ever in In­dia and Rus­sia’s largest over­seas deal. The takeover, agreed on Satur­day, is ex­pected to be com­pleted in the next few months.

The chief ex­ec­u­tive of Rus­sian lender VTB, which ad­vised on the deal, has said it was spe­cially struc­tured to en­sure it was not affected by Western sanc­tions im­posed on Ros­neft and its boss Igor Sechin, an ally of Rus­sian leader Vladimir Putin. Since Ros­neft will con­trol only 49 per­cent of Es­sar un­der the deal, with Trafigura and UCP jointly hold­ing an­other 49 per­cent, the sanc­tions risk is mit­i­gated.

But the struc­ture has raised ques­tions about whether UCP and Trafigura will cede their shares to Ros­neft once sanc­tions are lifted or eased, giving Sechin full con­trol over the ac­qui­si­tion.

The sanc­tions were im­posed over Mos­cow’s an­nex­a­tion of Crimea and sup­port for sep­a­ratist rebels in east­ern Ukraine. “We do not plan to sell our stake to any­one in the near fu­ture,” Irina Lan­ina, a direc­tor of UCP, said in a writ­ten response to Reuters’ ques­tions. “We plan to make this in­vest­ment in a con­sor­tium with our part­ner Trafigura and are likely to exit to­gether with them as well. As of now, we are look­ing at (re­main­ing in Es­sar) for 3-5 years but time will tell,” Lan­ina said. — Reuters

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