Life after Rosneft deal: CEFC ambitions face debt, regulatory hurdles

HONG KONG: CEFC China Energy is considering more deals after recently snapping up a US$9.1 billion stake in Russia’s Rosneft, industry sources said, shrugging off a growing debt pile and rising regulatory scrutiny.

Privately owned CEFC, in just a few years, has gone from a niche oil trader to a US$25 billion conglomerate with strong political ties and a rare contract to store part of the nation’s strategic oil reserve.

Its ambit now extends beyond oil assets to infrastructure and even financial services.

It is one of a handful of conglomerates in China with all financial services licenses, owning or controlling banks, an insurer, a brokerage firm, a trading platform and several funds, according to its website.

CEFC has long held overseas growth ambitions and grabbed the spotlight when it became the first to clinch a major deal since China’s recent crackdown on over-heated acquisitions.

Last week, days after Russian President Vladimir Putin visited Beijing, CEFC agreed to buy a 14.2 per cent stake in Rosneft, Russia’s largest oil producer, from commodities giant Glencore and the Qatar Investment Authority.

But CEFC, whose ultimate owners are individuals, according to public corporate registry filings, has a broader plan.

Industry executives and analysts describe the 15-year-old group as wanting to be the new Sinopec, Asia’s largest oil refiner, or China’s own Glencore. That would mean more deals are inevitable.

CEFC is considering investing in En+ as part of the aluminiumto-power conglomerate’s planned IPO, Reuters reported earlier this week.

And the group had expressed interest in investing in Portugal during a recent visit, with energy and insurance assets likely targets, according to industry sources.

CEFC has tapped China Development Bank and Russian lender VTB to help fund the Rosneft deal, one banking source said.

CDB, a Chinese policy bank, has long supported CEFC and is its biggest lender, according to the company’s financial reports. — Reuters