Glencore sale of Rosneft stake earns rivals’ respect, bankers’ relief
LONDON: Glencore’s move last week to sell most of its stake in Russian oil major Rosneft to Chinese conglomerate CEFC is eliciting admiration from the Swiss oil trader’s rivals – and relief from its bankers.
To rivals, it appears to be a clever deal by Glencore’s boss Ivan Glasenberg, who had initially invested 300 million euros of Glencore’s money in a deal worth 10.2 billion.
On paper, after nine months he shows a small loss: Glencore retains a 0.5 per cent equity stake in Rosneft, now worth around 250 million euros.
But crucially, traders expect Glencore to hold on to the most valuable benefit of the deal: an agreement to let his firm sell hundreds of millions of barrels of Russian oil to global markets over five years.
“It is a very sweet deal. I wouldn’t hesitate to pay three times what Glencore paid to get those volumes,” said a trader with a rival.
For Glencore’s bankers, the relief comes from unwinding the original deal, Russia’s biggest privatisation since the 1990s, under which Glencore and Qatari sovereign wealth fund QIA bought nearly a fifth of Rosneft through a structure of offshore holding companies funded mostly by debt.
When that deal was reached in December, participants did not fully disclose the beneficiaries of their off-shore investment vehicle to the public, or explain which Russian banks were among those providing loans.
Most big state Russian banks are subject to US and EU sanctions imposed on Russia over its annexation of Crimea and interference in east Ukraine in 2014.
“This structure is now being unwound. Everyone will now own Rosneft shares directly – Glencore, Qatar and China. The debt to banks is also being paid out,” said a senior source close to last week’s deal who asked not to be identified due to the sensitivity of the issue.
Rosneft is run by Igor Sechin, a close ally of President Vladimir Putin. Putin awarded state medals to Glasenberg for executing last year’s deal, and to the head of the Russian office of Italian bank Intesa SanPaolo for helping fund it with a 5.2 billion euro loan.