14:35 — REGNUM The deal to sell a 19.5% stake in Rosneft worth €10.5 billion is in its final stages. A stake in the Russian company was acquired by the Swiss Glencore and the Qatari sovereign wealth fund. Leading Analyst at the National Energy Security Fund (NESF) and Lecturer at the Financial University under the Government of the Russian Federation Igor Yushkov in conversation with a correspondent IA REGNUM shared his opinion on why such investors were chosen and what role the personal interests of the head of Rosneft can play in this event Igor Sechin.
Ivan Shilov © IA REGNUM
“Here I am of the opinion that the publication that Rosneft is suing, that Sechin asked Putin not to allow BP (British Petroleum company - ed.) to buy a trial stake, so that it does not increase the blocking stake, which in fact actually this is true. At least, even if Sechin did not ask, at least his strategy was to divide all these stakes that belong to foreign investors, and in general, to third-party investors, into shares that would be less than the blocking stake. In order not to get some independent player on their board, so that they do not have a representative board of directors, in fact, some significant one, and so that they cannot influence the company's management, so that he (Sechin - ed. ) still kept everything in his hands, all the levers of control ", the expert explained.
Why the choice fell on such a consortium is really strange, Yushkov notes. In his opinion, one of the conditions was that any investor who invests, firstly, had to take the position that he would not receive any management of the company, would not be able to influence decisions. Secondly, a potential investor had to give at least 700 billion rubles in dollars or euros. Otherwise, the head of Rosneft, Igor Sechin, could be criticized, and even his relationship with Vladimir Putin could get hurt. Therefore, they decided to conclude a deal with those investors who agreed to these conditions, the leading analyst of the FNEB suggests.
“Although I do not rule out that in fact there were some complex agreements. No wonder Glencore is involved in the deal. This company has become the largest buyer of traders, the largest buyer of oil from Rusneft. There was a big, very long-term contract. Including, it turns out, they entered in a complex way: they bought a share from Rosneft and, on the other hand, signed another long-term agreement on oil supplies. Here, it’s unlikely that anyone else could go for such a complex deal.”, says the expert.
Recall that earlier Chinese, Indian and Kazakh investors were named among the contenders for the purchase of Rosneft shares. Even the option was considered that Rosneft itself would buy back its own shares with the possibility of further resale. Yushkov notes that, with regard to the choice of investors, here, probably, Sechin tried to somehow balance their participation. Rosneft sold shares in East Siberian fields to representatives of India. As for the Chinese, there are also long-term contracts with them. And the Qataris and Glencore were given a stake in Rosneft itself.
Igor Yushkov also suggested this option: “Maybe, on the other hand, this is a forced measure. Because, I think, Sechin himself wanted to buy out oil and gas shares in Rosneft. In the future, he would have disposed of them, and they would have remained under his greater control. I think that in many ways it was the president’s demand to sell it to foreign investors and get money for the budget.”
The fact is that in the story of the privatization of Bashneft by Rosneft, Sechin, as it were, managed to outplay the government. Even despite the initial statement by the President of the country that state-owned companies should not privatize other state-owned companies, the privatization according to the plan conceived by Sechin took place. In this case, the analyst says, it probably failed to convince Putin.
At the same time, an expert from the National Energy Security Fund believes that an even more complex plan to seize Rosneft shares is also possible: “I do not rule out that in a year we will see that a package, for example, of this Qatari fund will suddenly end up in the hands of a Russian state company. That is, not even a state-owned, but a private Russian company. For example, the same Independent Oil Company affiliated with Rosneft, Khudoynatov, the former head of Rosneft. It is possible that the Qatari fund and even Glencore will be a temporary holder of these shares.
As for the final completion of the transaction and the receipt of funds to the budget, the expert said that, most likely, the sale would be completed before the end of the year. Because the money is already included in the budget. However, there may be a very complicated scheme for crediting this money to the budget. According to Vladimir Putin, it is necessary to carry out exchange operations in several tranches. Enrollment in the budget should be in rubles, and the money from the sale of Rosneftegaz will come in euros. Then they must somehow be converted. It is possible that this will be already during 2017.
Recall that today, December 8, Russian President Vladimir Putin highly appreciated the rapid privatization of Rosneft. The head of state congratulated Igor Sechin, calling the deal for the sale of a 19.5 percent stake the largest deal on the world energy market this year. Putin also noted that as a result of the deal, Russia will soon receive the volume of the euro, so Sechin should develop measures for a phased conversion so as not to bring down the foreign exchange market.
Igor Sechin said that the cost of the transaction was the highest possible in modern conditions - €10.5 billion. As noted, the Cabinet of Ministers has already prepared all the necessary documents for the purchase. The Federal Antimonopoly Service will soon receive a petition to approve the deal.
Background
The history of privatization in Russia began with the so-called "voucher" sale of state-owned enterprises in 1992. In 1995, auctions were held to replenish the treasury with loans secured by state-owned stakes in several large companies, such as Yukos and Sibneft. The government did not return the loans, so the enterprises became the property of creditors. In the second half of the 2000s, the natural monopoly in the field of energy generation and transportation, RAO UES, was partially privatized. In recent years, due to the aggravation of contradictions with the United States and the imposition of sanctions, the Russian authorities are actively looking for new sources of income, including through the sale of state assets.
A consortium of Glencore and Qatar Sovereign Fund will buy a 19.5% stake in the company for 10.5 billion euros.
Igor Sechin, Chief Executive Officer of Rosneft, reported this directly to President Vladimir Putin. The consortium members have equal shares - 50% each, Sechin said. The amount of the deal is 10.5 billion euros, said presidential spokesman Dmitry Peskov (quote from Interfax). This is 721 billion rubles at the exchange rate of the Central Bank on December 7, the government directive obliged Rosneftegaz to sell a stake in Rosneft for at least 710.8 billion rubles. “The sale price is, from our point of view, the highest possible, with a minimum discount, which was offered to investors, of 5% from the current quotations on the exchange on December 6,” said the head of Rosneft. According to our calculations, despite the sale, the value of the stake, which belongs to the state, will increase by about 80 billion rubles, Sechin said.
Payment will be made both at the expense of own funds and at the expense of attracted credit financing, organized by one of the largest European banks (transcript on kremlin.ru).
The deal has additional elements: the conclusion of a long-term supply contract with Glencore, the coordination of positions in the markets and the creation of a special mining enterprise together with this consortium both in Russia and abroad, Sechin said.
The government approved Rosneft's dividend policy, which provides for a payment of 35% of profits, Igor Sechin said (quoted by Interfax). The former dividend policy assumed the payment of dividends in the amount of 25% of profits. The high quality of attracted investors, as well as the transition of Rosneft to a new dividend payment standard, will certainly lead to an increase in the company's capitalization, including the remaining state stake, Sechin told the president. “I really hope that the arrival of new investors<…>management will improve corporate procedures, the transparency of the company,” Putin said” (quote from kremlin.ru).
The government directive ordered Rosneftegaz to sell the shares by December 5, settlements with the buyer must be completed no later than December 15, and Rosneftegaz must transfer money to the budget by December 31. The sale was delayed by two days. Back in late November, the president was asked about the possibility of moving these dates, but he ordered to stick to the deadlines, several federal officials told Vedomosti. About a week ago, Russian Presidential Aide Andrei Belousov said that he sent a letter to Rosneft asking them to hurry up "with proposals on privatization methods." But after that, neither officials nor Rosneft gave any information about the deal. Andrei Belousov said only that he was completely satisfied with the answer received from Rosneft, and the presidential press secretary Dmitry Peskov assured journalists that the money would go to the budget by December 15.
Igor Sechin and the company's first vice president for economics and finance, Pavel Fedorov, have been on business trips abroad in the past few weeks - they met with potential buyers of 19.5% of Rosneft, RBC wrote, citing a friend of top managers and a federal official. Rosneft managers were at a road show abroad yesterday as well, a federal official confirmed to Vedomosti. Neither Sechin nor Fedorov attended Wednesday's meeting with Energy Minister Alexander Novak, where the heads of companies were invited, according to an Interfax report.
The market expected the board to approve a deal for the Rosneft group to buy shares from Rosneftegaz, a source at the investment company said. This scenario was considered the most likely. It was also indicated by Rosneft's rapid placement on Monday of 10-year bonds for 600 billion rubles. Although the company said it would use the funds to refinance debt and foreign projects, experts said that this amount of rubles could be needed to buy back shares by the companies of the Rosneft group.
Initially, the buyback of shares by Rosneft itself was a “backup option”, it was needed rather to secure the budget and was not particularly needed by the company itself - this is how a high-ranking federal official commented to Vedomosti on the news that Glencore and the Qatari sovereign wealth fund became buyers of shares. He acknowledged that from the point of view of privatization, the buyback of the company's shares by itself or its "daughters" is "also an unusual practice", so when it became clear that there were two real investors, "we decided to do without a complex chain." According to the interlocutor of Vedomosti, Igor Sechin personally dealt with the deal, he found investors and offered this particular option.
Glencore, one of the world's largest trading companies, has had business in Russia for a long time. It owns 8.8% of UC Rusal, 26% of the Russneft oil company, the Moscow Grain Company (MZK), a grain terminal on the Sea of Azov, the company controls agricultural land in the Stavropol Territory and the Kuban. The sale of energy resources brings Glencore 54% of revenue, last year it amounted to $ 172.7 billion. 70.4% of the company's shares are in free float, the largest shareholders are Qatar Holdings (8.99%), CEO Ivan Glasenberg (8.42%) , Daniel Francisco Mate Badenes (3.19%), Aristotelis Mistakidis (3.17%), Thor Peterson (2.8%), Alex Bird (2.45%). The transformation of Glencore from a commodity trader into a mining giant is associated with the name of Ivan Glasenberg. In 2013, Glencore took over the Anglo-Swiss Xstrata and became the world's fourth largest mining company.
The Qatar Sovereign Fund (Qatar Investment Authority) was founded in 2005 to strengthen the economy of Qatar through asset diversification. According to Al Jazeera, in 2013 the fund managed assets worth up to $100 billion. The Qatar Investment Authority also has projects in Russia. Since 2014, he has been a partner of the Russian Direct Investment Fund (RDIF) on a number of projects, including investments in Pulkovo International Airport. Recently it became known that the Qatari fund, together with RDIF and Roman Trotsenko, are agreeing to purchase a large stake in Air Gates of the Northern Capital (the concessionaire of Pulkovo Airport) from the structures of VTB Capital. A spokesman for RDIF declined to comment yesterday. A source close to RDIF told Vedomosti that the fund itself did not participate in the deal, but considers it beneficial for all participants.
“Russian oil companies are now extremely undervalued due to low oil prices, sanctions, geopolitical risks,” says Valery Nesterov, an analyst at Sberbank CIB. But the situation can change at any moment. In addition, Rosneft is a global company with a strong resource base, it is rapidly developing, modernizing its assets, recently bought Bashneft and continues to buy: from this point of view, the deal looks very profitable and prestigious for the consortium, the analyst concludes.
Now Rosneft, together with the Central Bank and the Ministry of Finance, needs to develop a scheme for converting currency into rubles, which would not negatively affect the market, Putin said. It is unlikely that Rosneftegaz will sell foreign currency on the market; an intracorporate deal with Rosneft is more likely: the currency will be transferred to Rosneft for settling debts and foreign purchases, and the 600 billion rubles that the company recently attracted will go to Rosneftegaz to pay to the budget, believes Natalia Orlova from Alfa-Bank.
The head of Rosneft and the chairman of the board of directors of Rosneftegaz, Igor Sechin, tried to explain the origin of the losses, due to which the SPV company may not pay dividends to the state for 2016 (see Kommersant dated May 17). According to him, they are connected with the privatization of Rosneft at the end of last year, when 19.5% of the state-owned company was sold to Glencore and QIA for 692 billion rubles. But neither the message of Rosneftegaz itself, nor the words of Mr. Sechin clarified the situation.
Rosneftegaz's loss of RUB 90.4 billion, reflected in the government's dividend directive, is an expense associated with Rosneft's privatization at the end of 2016. This was announced in Sochi by the head of Rosneft and the chairman of the board of directors of Rosneftegaz, Igor Sechin. "There was not very correct information about the losses of Rosneftegaz. These are not losses, these are just expenses associated with privatization. Relevant agreements were concluded with consultants, including foreign ones, this was subject to payment, there were conversion costs," he said . In addition, he recalled that the Kaliningrad Thermal Power Plant is being built at the expense of Rosneftegaz, and a number of scientific organizations are being financed. How much was spent, he did not specify. At the same time, Mr. Sechin assured about dividends: "Whatever the government decides, we will pay for everything, don't even worry."
Meanwhile, the draft directive of the Federal Property Management Agency dated April 23 states that Rosneftegaz received a loss under RAS of 90.4 billion rubles in 2016. (in 2015, the company's net profit amounted to 149.4 billion rubles). Rosneftegaz itself, whose reporting has been classified since 2014, said that its profit for 2016 from business operations amounted to 596 billion rubles, without specifying how it was formed. At the same time, the company received in 2016 in the form of dividends in general by about 107.6 billion rubles.
In general, according to the directive, Rosneftegaz transferred dividends to the budget for 717 billion rubles last year. (including 692.4 billion rubles for the Rosneft package and 24.6 billion rubles of interim dividends). Also, excluding this transaction, the company gave the state and 18 billion rubles. in the form of dividends for 2015. Rosneftegaz sold a stake in Rosneft in early December last year to a consortium of Glencore and Qatar Investment Authority (QIA), but the deal was actually closed in January 2017. At the same time, Intesa Sanpaolo Bank announced that it had issued a loan of up to €5.2 billion to buyers. After the deal was closed, QHG Shares Pte became the owner of Rosneft shares. Ltd (later renamed QHG Oil Ventures), registered in Singapore. To complete the transaction, VTB issued a bridge loan to buyers for the purchase amount in mid-December 2016. QHG Shares spent this money on Rosneft shares, and Rosneftegaz immediately transferred the funds to the budget. At the same time, VTB conceded the loan to Rosneftegaz itself, and it was paid back in January 2017, when Glencore and QIA received money from foreign banks.
Thus, at the end of 2016, the loan had not yet been repaid, although Rosneftegaz had already paid the money to the budget. However, this does not explain why the loss of Rosneftegaz in this case amounted to only 90 billion rubles, and not a much larger amount. If the loan was set off as a receivable, as is usually the case, the origin of the losses is all the more unclear.
Olga Mordyushenko
The head of Rosneft, Igor Sechin, reported to Russian President Vladimir Putin on the completion of the deal to privatize 19.5 percent of the oil company's shares. This was announced on Wednesday, December 7, by the press secretary of the head of state Dmitry Peskov, a Lenta.ru correspondent reports. “The buyers and strategic investors were a consortium of Glencore and the Qatari sovereign wealth fund,” Peskov said. The Kremlin spokesman also said that 10.5 billion euros would go to the budget of the Russian Federation from the deal. According to him, Putin called it the largest agreement on the global energy market in 2016.
And now just go through the comments and notes to this news.
More to understand what was sold:
2013: For the second year in a row, Rosneft remains the main contributor to the Russian budget. At the annual meeting of shareholders held on June 20 in St. Petersburg, the company's president, Igor Sechin, said that the company "is the No. 1 taxpayer": in 2012, 1.7 trillion rubles were transferred to the budget. rubles, which is 16% more than a year earlier.
2015: Rosneft will remain Russia's largest taxpayer in 2015, the company says. In 2014, Rosneft transferred 3.096 trillion rubles to the budget, including 982 billion rubles from the mineral extraction tax and 1.683 trillion rubles from export customs duties.
UPD. More opinions on this issue: We broke the blockade of Western financiers
"Crystal House" with a hammam and a wine room: Sechin bought a 5-storey apartment for 2 billion rubles
The head of Rosneft, Igor Sechin, became the owner of an apartment in Moscow for 2 billion rubles. in an elite district of Moscow, The Insider found out. His luxurious mega-apartment is located in the Golden Mile area, a prestigious quarter between Ostozhenka and Prechistenskaya embankments. The cost with a hammam and a wine room exceeds the amount that Rosneft spends on charity.
5 floors, hammam, cinema and wine room
On July 27 of this year, Sechin became the owner of an apartment at the address per. Korobeinikov, d 1. The area of the dwelling is 1229 square meters. The size of the apartment is comparable to a hockey rink, which the head of the state corporation became interested in at the suggestion of Vladimir Putin.According to an extract from the USRN (available to The Insider), Sechin's apartment occupies 5 floors at once.
The apartment is located in the LCD club type Crystal House - this is one of the most expensive real estate in Moscow. Against the background of the surrounding buildings, it stands out with facades made of glass and Jurassic stone.
