Ros­neft quiet on stake sale de­tails

The Star Early Edition - - BUSINESS REPORT - Katya Gol­ubkova, Dmitry Zh­dan­nikov and Stephen Jewkes

MORE than a month af­ter Rus­sia an­nounced one of its big­gest pri­vati­sa­tions since the 1990s, sell­ing a 19.5 per­cent stake in its gi­ant oil com­pany Ros­neft, it still isn’t pos­si­ble to de­ter­mine from pub­lic records the full iden­ti­ties of those who bought it.

The stake was sold for €10.2 bil­lion (R145.5bn) to a Sin­ga­pore in­vest­ment ve­hi­cle that Ros­neft said was a 50/50 joint ven­ture be­tween Qatar and Glen­core.

Un­veil­ing the deal at a meet­ing with Ros­neft’s boss Igor Sechin on De­cem­ber 7, Pres­i­dent Vladimir Putin called it a sign of in­ter­na­tional faith in Rus­sia, de­spite US and EU fi­nan­cial sanc­tions on Rus­sian firms.

“It is the largest pri­vati­sa­tion deal, the largest sale and ac­qui­si­tion in the global oil and gas sec­tor in 2016,” Putin said.

It is one of the big­gest such deals since the early postSoviet years, when al­lies of for­mer pres­i­dent Boris Yeltsin took con­trol of state firms and be­came bil­lion­aires overnight.

De­tails miss­ing

But im­por­tant facts about the deal ei­ther have not been dis­closed, can­not be de­ter­mined solely from pub­lic records, or ap­pear to con­tra­dict the straight­for­ward of­fi­cial ac­count of the stake be­ing split equally by Glen­core and the Qataris.

For one: Glen­core con­trib­uted only €300 mil­lion of eq­uity to the deal, less than 3 per­cent of the pur­chase price, which it said on De­cem­ber 10 had bought it an “in­di­rect eq­uity in­ter­est” lim­ited to just 0.54 per­cent of Ros­neft.

Pub­lic records show the own­er­ship struc­ture of the stake ul­ti­mately in­cludes a Cay­man Is­lands com­pany, whose own­ers can­not be traced.

And while Ital­ian bank In­tesa San­Paolo lent the Sin­ga­pore ve­hi­cle €5.2bn to fund the deal, and Qatar put in €2.5bn, the sources of fund­ing for nearly a quar­ter of the pur­chase price have not been dis­closed by any of the par­ties.

“The main ques­tion in re­la­tion to this trans­ac­tion, as ever, still sounds like this: Who is the real buyer of a 19.5 per­cent stake in Ros­neft?” Sergey Alek­sashenko, a for­mer deputy head of Rus­sia’s cen­tral bank, wrote in a blog last week.

Glen­core would not com­ment on the iden­tity of the Cay­man Is­lands firm or fur­ther ex­plain how own­er­ship of the 19.5 per­cent stake was di­vided.

The Qatari In­vest­ment Au­thor­ity said it would not com­ment on the deal, beyond con­firm­ing that it had par­tic­i­pated in it.

Ros­neft and the Krem­lin de­clined to re­spond to ques­tions.

Like many large deals, the Ros­neft pri­vati­sa­tion uses a struc­ture of shell com­pa­nies own­ing shell com­pa­nies, com­monly re­ferred to in Rus­sia as a “ma­tryoshka”, af­ter the wooden nest­ing dolls that open to re­veal a smaller doll in­side.

Fol­low­ing the trail of own­er­ship leads to a Glen­core UK sub­sidiary and a com­pany that shares ad­dresses with the Qatari In­vest­ment Au­thor­ity, but also to a firm reg­is­tered in the Cay­man Is­lands, which does not re­quire com­pa­nies to record pub­licly who owns them. The Sin­ga­pore-reg­is­tered in­vest­ment ve­hi­cle that holds the stake in Ros­neft is called QHG Shares. It is owned by a UK-reg­is­tered lim­ited li­a­bil­ity part­ner­ship, QHG In­vest­ments, which in turn lists as one of its two own­ers an­other UK-reg­is­tered lim­ited li­a­bil­ity part­ner­ship, QHG Hold­ing, cre­ated on De­cem­ber 5.

FILE PHOTO: REUTERS

A stake in Rus­sian oil gi­ant Ros­neft was sold last month, but de­tails of the new own­ers are murky.

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