Rosneft’s partner in Essar deal likely to sell stake
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