View the article online at http://citywire.co.uk/money/article/a629286
Artemis buys into Rosneft, says it's the winner from BP deal
Managers of the Artemis Global Energy Fund say Rosneft is the real winner from this week's deal, but BP has 'regained a lead' on its competitors.
Russian state energy company Rosneft is the real winner from this week’s deal with BP (BP.L) to buy the London-listed oil major’s stake in TNK-BP, the managers of the £107 million Artemis Global Energy Fund have said. But still, ‘BP has regained a lead on other majors.’
BP announced on Monday that it was selling its 50% stake in TNK-BP to Rosneft in exchange for $17.1 billion in cash, shares representing 12.84% of Rosneft, and two seats on the board. It will use $4.8 billion of the cash to buy a further 5.66% of Rosneft from the Russian government.
‘For BP this removes a lot of uncertainty, but the beneficiary is going to be Rosneft,’ said John Dodd, who is a partner in and co-founder of Artemis.
In addition to BP’s 50% stake in TNK-BP, Rosneft announced it was buying the remainder from AAR, paying $55 billion to make it the largest listed oil company in the world.
‘We’ve started buying Rosneft. As a long-term investment it’s a very important strategic play,’ Dodd said.
Dodd and his co-manager Richard Hulf – whose fund is the top performer in the global energy sector – said the deal was part of a trend whereby state-run energy companies will have to join forces with their private partners.
Hulf said: ‘It’s part of a trend that we have identified, at least 50-60% of world resources are under the ownership of state companies including Rosneft… state companies need the expertise and balance sheets of private companies. BP has regained a lead here on other majors.’
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The deal has raised concerns that BP is effectively buying into Russian leader Vladimir Putin, but it also brings an end to a lucrative but fractious relationship with TNK-BP co-owner AAR. ‘It’s better the devil you know for BP,’ Hulf added.
Analysts have questioned how long it will take for BP to reap the benefits of the deal, while adding that the investment case for BP remains clouded ahead of a settlement with the US government over the 2010 Gulf of Mexico oil spill.
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by Gavin Lumsden on Sep 30, 2016 at 17:23