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Rosneft issue raises more than $10bn

From The Financial Times
By Joanna Chung and Nikki Tait in London and Arkady Ostrovsky in Moscow

Published: July 14 2006 19:55 | Last updated: July 14 2006 19:55

“BP and Malaysia’s Petronas took stakes worth about $1bn each.”

Rosneft, the state-controlled oil company, on Friday raised $10.4bn in Russia’s biggest initial public offering as the country seeks to demonstrate its weight and power in the global financial markets.

The IPO, which comes on the eve of Russia hosting the summit of the G8 meeting of leading industrialised nations, is also the world’s sixth biggest. The flotation attracted strong demand from investors, particularly from oil companies and Russian investors.

The listing of shares in London and Moscow was launched in spite of concerns over the circumstances in which it acquired its main asset. Most of Rosneft’s output comes from Yuganskneftegaz, which it bought in 2004 after the forced break-up of Yukos oil company. On Friday, Yukos continued to pursue its legal challenge to the Rosneft flotation. Yukos has sought permission in London for a judicial review, in an effort to stop the full listing of Rosneft’s shares, which are due to start trading unconditionally on Wednesday. This legal challenge will be heard in London’s High Court on Monday, a judge decided on Friday.

Shares in Rosneft rose slightly in conditional trading to close at $7.60, after pricing at $7.55 a share.

The flotation, which sold off 14.8 per cent of the company by issuing 1.38bn shares, gave the company a valuation of $79.8bn. The amount raised could rise from $10.4bn to $10.8bn if the company exercises its over-allotment option.

About 50 per cent of the offering was allocated to four accounts, including oil companies. BP and Malaysia’s Petronas took stakes worth about $1bn each. China National Petroleum Corp was allotted a stake worth $500m, even though it had put in a bid amounting to $3bn. It is unclear whether the fourth investor is a foreign or Russian investor.

Russian investors, other than retail, took about 39 per cent of the offering, people close to the IPO said. Russian retail investors took up about 7 per cent do the deal.

Foreign portfolio investors took about 36 per cent of Rosneft’s shares.

Copyright The Financial Times Limited 2006

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