22.10.2020

VTB and privatization of Rosneft

VTB has been associated with the privatization of Rosneft two years ago. At the end of December 2016 chief Executive Director of “Rosneft” Igor Sechin announced the sale of 19.5% of the company to a consortium composed of QIA and Glencore. The transaction was closed on 3 January 2017. As a result of privatization package of Rosneft the Russian state budget received 710,8 billion ($11.1 billion or €10.5 billion).

Before Qatari Fund in may agreed to buy 14.2% in Russian oil company, structure of shareholders was as follows. 19.5% of the company belonged to the Singapore QHG Oil Ventures (a joint venture between the QIA and Glencore), 19,75% BP, 50% plus 1 share in the state – owned Rosneftegaz. QIA had to buy 14.2% of Rosneft after the deal fell through between the CEFC and QHG of Chinese Oil Ventures (a Chinese company after reports of the arrest of its head, ye Jianming began to have serious financial problems).

September 7, Glencore announced the completion of the sale of 14,16% “Rosneft” the sovereign Fund of Qatar. The result is added to the QIA to 4.77% of shares of “Rosneft” a package of 14.16% and now directly owns was 18.93% stake in the Russian company. Glencore’s share of Rosneft decreased to 0.57%.

VTB and privatization of “Rosneft”

Own investments amounted to €2.8 billion, while Glencore has paid from its own funds of €300 million, and QIA – €2.5 bn Major creditor of the consortium was made by the Italian Bank Intesa Sanpaolo, which has allocated €5.2 billion €2.2 billion provided unnamed creditors (among them, wrote “Vedomosti”, RBC, could be VTB and Gazprombank). In addition, VTB in December 2016 provided the interim financing the purchase by issuing for one week €10.2 billion Singapore QHG Shares (JV QIA and Glencore). This amount was transferred to “Rosneftegaz” in the Federal budget for 2016.

VTB was the lender of QHG Shares just a few days. In fact, the seller share (“Rosneftegaz”) and buyers (QIA and Glencore) had actually conducted a currency swap with the mediation of VTB. That is, QHG Singapore Shares took a loan from VTB rubles, which Rosneftegaz has transferred to the budget in payment transactions. 22 December VTB signed with “Rosneftegaz” the assignment agreement by which the pledge (19.5% of Rosneft shares) and the loan was transferred to the “Rosneftegaz”.

3 Jan 2017 Italian Bank Intesa Sanpaolo QHG Shares issued credit in the amount of €5.2 billion. then QHG Shares to repay the loan before the “Rosneftegaz” by donating €10.2 billion (or 692,4 billion rubles at the exchange rate on 6 December 2016). “All the tasks set in the framework of this transaction had been fully implemented, and such a sequence (first bridge loan in rubles, and then transferred to the customers, amount in euros) due to the fact that in particular, one of the objectives was to avoid volatility in the currency market,” Forbes said in January 2017, the press service of Rosneft.

According to Sechin, in 2017 direct funding provided only the purchase of 5.3% of shares of “Rosneft” from the package of 19.5%. The rest of the 14,16% of the shares were purchased for credit.

VTB participated and failed in the end, the deal between the CEFC and QHG Oil Ventures. The state Bank in January 2018 was signed with the CEFC an agreement to provide €5 billion secured by the purchased shares of “Rosneft”. However, the CEFC are unable to refinance in the state banks of China, and in early may, 2018 line of credit was closed.

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