MOSCOW (MRC) -- Russian private investment group United Capital Partners (UCP), which is teaming up with oil giant Rosneft to buy India's Essar Oil in a USD12.9-B deal, said it may sell its stake within five years, reported Hydrocarbonprocessing.
The purchase of Essar Oil, by Russia's state-owned Rosneft and a consortium of UCP and global oil trader Trafigura, will be the biggest foreign acquisition ever in India and Russia's largest overseas deal. The takeover is expected to be completed in the next few months.
The chief executive of Russian lender VTB, which advised on the deal, has said it was specially structured to ensure it was not affected by Western sanctions imposed on Rosneft and its boss Igor Sechin, an ally of Russian leader Vladimir Putin.
Since Rosneft will control only 49% of Essar under the deal, with Trafigura and UCP jointly holding another 49%, the sanctions risk is mitigated.
But the structure has raised questions about whether UCP and Trafigura will cede their shares to Rosneft once sanctions are lifted or eased, giving Sechin full control over the acquisition.
The sanctions were imposed over Moscow's annexation of Crimea and support for separatist rebels in eastern Ukraine.
"We do not plan to sell our stake to anyone in the near future," Irina Lanina, a director of UCP, said in a written response to Reuters' questions.
"We plan to make this investment in a consortium with our partner Trafigura and are likely to exit together with them as well. As of now, we are looking at (remaining in Essar) for 3-5 years but time will tell," Lanina said.
Lanina said that UCP plans to use its own funds and credit facilities to finance the acquisition of its stake but did not say how much it would cost.
As MRC informed previously, last week, it became known that Russian oil major Rosneft, along with European trader Trafigura and Russian fund UCP, would acquire 98% in India's Essar Oil for about USD12 B - USD13 B including debt. Rosneft will get 49% and the two investors - Trafigura and UCP - will hold the remaining 49% in equal parts, the sources said, adding that the valuation included about USD4.5 B in assumed debt. Essar Oil operates a 400 Mbpd oil refinery on India's west coast and sells fuels through its 2,470 filling stations in India.
Rosneft became Russia's largest publicly traded oil company in March 2013 after the USD55 billion takeover of TNK-BP, which was Russia’s third-largest oil producer at the time. Apart from other assets, Rosneft owns Angarsk Polymer Plant and Ufaorgsintez in Russia and Lisichansky refinery in Ukraine.
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