Glencore, Qatari fund buy into Russian state oil giant
MOSCOW: Commodity trader Glencore Plc and Qatar’s sovereign wealth fund agreed to buy a €10.2-billion ($11 billion) stake in Russia’s largest oil producer from the state in a triumph for President Vladimir Putin over sanctions imposed by the West.
The surprise deal gives the buyers a 19.5% stake in Rosneft PJSC, which the US and European Union have targeted with punitive measures, and is the biggest foreign investment in Russia since the crisis in Ukraine.
It also marks a stunning return to dealmaking for Glencore chief executive Ivan Glasenberg a little more than a year after his company was forced to raise cash from shareholders.
Glencore said in a statement on Wednesday that it would commit €300 million in equity, with the rest coming from the Qatar Investment Authority — itself Glencore’s largest shareholder — and bank financing.
It said the deal was still in “final-stage negotiations” and would likely close in mid-December.
The QIA declined to comment. Putin, who announced the deal on television with Rosneft CEO Igor Sechin, put the total deal value at €10.5 billion.
It wasn’t immediately clear why the figures differ.
Bringing in buyers for Rosneft, especially a trader like Glencore, probably makes “Putin smile all the way to when Santa Claus comes around in Moscow,” Steen Jakobsen, the chief investment officer of Saxo Bank A/S, said on Bloomberg Television yesterday.
“Putin was under pressure because the privatisation programme in Russia has been very stale and it has been almost impossible to find them a deal partner.”
Rosneft, which pumps almost five million barrels a day, held talks with more than 30 potential buyers from Europe, America, Asia and the Middle East, Sechin told Putin on state television. “The deal became possible only thanks to your personal contribution.”
The price was the “maximum possible with the minimum discount,” Sechin said.
“One of the largest European banks will provide financing,’’ he added.
Intesa Sanpaolo SpA agreed to provide financing for Glencore, according to two people familiar with the deal who declined to be identified because they were not authorised to speak on the matter.
Intesa, which worked for the Russian government as its consultant on the Rosneft privatisation sale, declined to comment, as did Rosneft. A Glencore spokesman couldn’t immediately be reached.
Russia is selling assets to raise money after the collapse in oil prices sapped government revenue.
Putin had said in October that, in the absence of buyers willing to pay an acceptable price, Rosneft might buy back its own shares and sell them on later.
“This is also a major win for Rosneft that avoids going through a ridiculous selfprivatisation exercise,” Luis Saenz, head of equity sales and trading at BCS Financial Group in London, said in a note. “Most importantly, a massive positive for Russia that’s moving closer to breaking the sanction/isolation regime.”
The deal marks the third big acquisition for Glasenberg after he led the takeover of mining company Xstrata and grain merchant Viterra.
He has transformed Glencore, which he floated only five years ago, into a commodities trader with a huge mining footprint and, now, a large oil production base.
Glencore is a longtime investor in Russia, with a blocking stake in midsized oil producer in RussNeft PJSC, as well as substantial agricultural holdings and shares in aluminium giant United Company Rusal.
It also participated, along with Vitol SA, in a $10 billion prepayment deal with Rosneft for crude supplies in 2013.